Administrative Code

Virginia Administrative Code
5/25/2022

Part III. Bonding

Article 2
Permit Renewal and Surety Adjustments

4VAC25-31-220. Requirements for bonding of mineral mines.

A. Once the permit application is deemed complete, the applicant shall submit a bond or bonds on a form meeting the requirements in 4VAC25-31-220 through 4VAC25-31-270, made payable to the department and conditioned upon the satisfactory performance of all the requirements of this chapter, the approved permit, and Chapter 12 ( § 45.2-1200 et seq.) of Title 45.2 of the Code of Virginia, including completion of the reclamation plan so that the land will be capable of supporting the approved post-mining land use.

B. The bond or bonds shall cover the entire area presently disturbed by mining plus the estimated number of acres to be disturbed in the upcoming year.

C. As additional areas outside the bonded acreage are to be disturbed to facilitate the mining operation, the permittee shall file a bond or bonds to cover the acreage with the division.

D. Bond shall be posted and accepted by the division prior to disturbing an area for mining-related activity.

E. Permitted operators shall certify annually with the permit renewal the type, current insurer or bank, and the amount of all reclamation bonds.

Statutory Authority

§ 45.2-103 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 38, Issue 13, eff. March 31, 2022.

4VAC25-31-230. Period of liability.

A. The bond liability shall be for the duration of the mineral mining operation and for the period following reclamation, which is necessary to demonstrate the success of the final reclamation.

B. In lieu of the requirements of 4VAC25-31-240 through 4VAC25-31-270, a permittee accruing five years of satisfactory operation under Chapter 12 ( § 45.2-1200 et seq.) of Title 45.1 of the Code of Virginia shall be required to enter the Minerals Reclamation Fund as established in Article 4 ( § 45.2-1234 et seq.) of Chapter 12 of Title 45.2 of the Code of Virginia and 4VAC25-31-320. All performance bonds will be released upon acceptance in the Minerals Reclamation Fund and payment of required fees.

Statutory Authority

§ 45.2-103 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 38, Issue 13, eff. March 31, 2022.

4VAC25-31-240. Bond amount.

A. Bond shall be set in accordance with § 45.2-1208 of the Code of Virginia.

B. The minimum bond for a mineral mining permit shall be $3,000, except for restricted permits and Minerals Reclamation Fund participants.

Statutory Authority

§ 45.2-103 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 35, Issue 21, eff. July 25, 2019; Volume 38, Issue 13, eff. March 31, 2022.

4VAC25-31-250. General terms and conditions of bond.

A. The bond shall be of the form and amount as specified by the division.

B. The performance bond shall be payable to the department.

C. The performance bond shall be conditioned upon satisfactory performance of all the requirements of this chapter, the approved permit, and Chapter 12 ( § 45.2-1200 et seq.) of Title 45.2 of the Code of Virginia, including completion of the reclamation plan so that the land will be capable of supporting the approved post-mining land use.

Statutory Authority

§ 45.2-103 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 38, Issue 13, eff. March 31, 2022.

4VAC25-31-260. Form of performance bond.

The bond shall be submitted in the form of cash, check, certificate of deposit, insurance surety bond, or irrevocable letter of credit.

A. Certificates of deposit.

1. Certificates of deposit must be made payable to the Treasurer of Virginia, Division of Mineral Mining.

2. The amount of the certificate of deposit must include the maximum early withdrawal penalty rounded up to the next higher hundred dollars.

3. The original certificate of deposit shall be submitted to the division and held by the division throughout the bond liability period.

4. Certificates of deposit must be automatically renewable.

5. The certificate of deposit must be from a bank located in the Commonwealth of Virginia or approved as an allowable bank depository by the Virginia Department of Treasury.

6. Interest accrued on certificates of deposit may be deposited to the permittee's individual account and is free of encumbrance by bond liability.

7. In the event of forfeiture of a certificate of deposit, the face value of the deposit plus any accrued interest that has been rolled back into the certificate principal will be subject to bond liability and expenditure in the performance of the reclamation obligation.

B. Surety bonds.

1. All bonds shall be in a form acceptable to the director. Bonds shall be executed by the permittee, and a corporate surety and agent licensed to do business in the Commonwealth.

2. Surety bonds shall not be canceled during their term except that surety bond coverage for lands not disturbed may be canceled with the prior consent of the division. The division shall advise the surety, within 30 days after receipt of a notice to cancel bond, whether the bond may be canceled on an undisturbed area.

C. Irrevocable letter of credit.

1. The director may accept a letter of credit on certain designated funds issued by a financial institution authorized to do business in the Commonwealth. The letter of credit shall be irrevocable and unconditional, shall be payable to the division on demand, and shall afford to the division protection equivalent to a corporate surety bond. The issuer of the letter of credit shall give prompt notice to the permittee and the division of any notice received or action filed alleging the insolvency or bankruptcy of the issuer, or alleging any violations of regulatory requirements that could result in the suspension or revocation of the issuer's charter or license to do business. In the event the issuer becomes unable to fulfill its obligations under the letter of credit for any reason, the issuer shall immediately notify the permittee and the division. Upon the incapacity of an issuer by reason of bankruptcy, insolvency, or suspension or revocation of its charter or license, the permittee shall be deemed to be without proper performance bond coverage and shall promptly notify the division, and the division shall then issue a notice to the permittee specifying a reasonable period, which shall not exceed 90 days, to replace bond coverage. If an adequate bond is not posted by the end of the period allowed, the permittee shall cease mineral extraction and mineral processing operations and shall immediately begin to conduct reclamation operations in accordance with the reclamation plan. Mineral extraction and mineral processing operations shall not resume until the division has determined that an acceptable bond has been posted. If an acceptable bond has not been posted by the end of the period allowed, the division may suspend the permit until acceptable bond is posted.

2. The letter of credit shall be provided on the form and in the format established by the director.

3. Nothing contained in this section shall relieve the permittee of responsibility under the permit or the issuer of liability on the letter of credit.

Statutory Authority

§§ 45.1-161.3 and 45.1-180.3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 30, Issue 6, eff. December 19, 2013.

4VAC25-31-270. Replacement of bonds.

A. The division may allow a permittee to replace existing bonds with other bonds that provide equivalent coverage.

B. The division shall not release existing performance bonds until the permittee has submitted and the division has approved acceptable replacement performance bonds. Replacement of a performance bond pursuant to this section shall not constitute a release of bond.

Statutory Authority

§§ 45.1-161.3 and 45.1-180.3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003.

4VAC25-31-280. Release of bond.

The division may release all or part of the bond for the entire permit area or a portion of the permit area if the division is satisfied that all reclamation covered by the bond or portion thereof has been accomplished in accordance with this chapter, the approved permit, and Chapter 12 ( § 45.2-1200 et seq.) of Title 45.2 of the Code of Virginia, including completion of the reclamation plan so that the land will be capable of supporting the approved post-mining land use.

Statutory Authority

§ 45.2-103 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 38, Issue 13, eff. March 31, 2022.

4VAC25-31-290. Intensive agricultural use.

If the post-mining use is to be intensive agriculture, then planting and harvesting of a normal crop yield is required to meet the regulatory requirements for full or partial bond release. A normal yield for a particular crop is equal to the five-year average for the county. If crop yield data is unavailable, then other methods to determine suitability for bond release may be utilized as acceptable to the director. The use of grass, water bars, or diversion strips and natural vegetative drainage control may be required in the initial planting year as specified by the director.

Statutory Authority

§§ 45.1-161.3 and 45.1-180.3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 30, Issue 6, eff. December 19, 2013.

4VAC25-31-300. Inspections for adequacy of vegetation and bond release.

A. Final inspection for bond release shall be made no sooner than two growing seasons after the last seeding.

B. Final inspection for bond release shall require:

1. No noncritical areas larger than one-half acre shall be allowed to exist with less than 75% ground cover. Vegetation shall exhibit growth characteristics for long-term survival.

2. Seeded portions of critical areas shall have adequate vegetative cover so the area is completely stabilized.

3. Bond release inspections for industrial, residential, or commercial post-mining use shall ensure that:

a. All areas not redisturbed by implementation of the post-mining use are reclaimed and satisfactorily stabilized.

b. All areas associated with construction of buildings or residential dwellings for post-mining use are covered by appropriate plans approved by the local governing body, i.e., erosion and sediment control plans, building permits, and development plans.

c. All areas not covered by such approved local government plans shall be reclaimed and stabilized in accordance with subdivisions 1 and 2 of this subsection prior to release of bond.

4. Bond release inspections for other post-mining uses will ensure that all areas not directly used by the post-mining use are stabilized in accordance with subdivisions 1 and 2 of this subsection and that the post-mining use is implemented.

Statutory Authority

§§ 45.1-161.3 and 45.1-180.3 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003.

4VAC25-31-310. Bond forfeiture.

A. If the permittee refuses or is unable to comply with an order by the director under § 45.2-1213 of the Code of Virginia, fails to comply with the terms of the permit, or defaults on the conditions under which the bond was accepted, the division shall take the following action to revoke the permit and forfeit the bond or bonds for the permit area or a portion of the permit area:

1. Send written notification by certified mail, return receipt requested, to the permittee and the surety on the bond informing them of the decision to revoke the permit and forfeit all or part of the bond, and the reasons for this action.

2. Advise the permittee and surety of the conditions under which forfeiture may be avoided. Such conditions may include:

a. Agreement by the permittee or another party to perform reclamation operations in accordance with a compliance schedule acceptable to the division, which meets the conditions of the permit and the reclamation plan, and demonstrates that such party has the ability to satisfy the conditions; or

b. The division may allow a surety to complete the reclamation plan if the surety can demonstrate an ability to complete the reclamation in accordance with the approved reclamation plan. Except where the division may approve partial release, no surety liability shall be released until successful completion of all reclamation under the terms of the permit.

B. In the event forfeiture of the bond is required, the division shall:

1. Proceed to collect the forfeited amount as provided by Virginia law for the collection of defaulted bonds or other debts if actions to avoid forfeiture have not been taken, if any rights of appeal have not been exercised within a time established by the division, or if such appeal is unsuccessful.

2. Use funds collected from bond forfeiture to complete the reclamation plan on the permit area.

C. Upon default the division may cause the forfeiture of any and all bonds deposited to complete reclamation for which the bonds were posted. Bond liability shall extend to the entire permit area under conditions of forfeiture.

D. Reclamation costs in excess of the forfeited bond amount will constitute a debt of the operator to the Commonwealth of Virginia and shall be collected in accordance with § 45.2-1214 of the Code of Virginia.

E. In the event the amount of performance bond forfeited was more than the amount necessary to complete reclamation, the unused funds shall be returned by the division to the party from whom they were collected.

F. Appeal of bond forfeiture decisions may be made by the operator by providing notice of appeal to the director in accordance with Article 3 (§ 2.2-4018 et seq.) of the Administrative Process Act. If the operator files a notice of appeal, then the director's orders revoking the permit and declaring forfeiture shall be held in abeyance until the appeal is determined.

Statutory Authority

§ 45.2-103 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 28, Issue 21, eff. July 18, 2012; Volume 38, Issue 13, eff. March 31, 2022.

4VAC25-31-320. Minerals Reclamation Fund (MRF).

A. Each operator who has had five years of satisfactory operation in the Commonwealth under Chapter 12 ( § 45.2-1200 et seq.) of Title 45.2 of the Code of Virginia shall become a member of the fund by making an initial payment to the fund of $50 for each acre currently disturbed and each acre estimated to be affected by mining operations during the next year. Thereafter the member shall make an annual payment of $12.50 for each acre currently disturbed plus each acre estimated to be affected during the next ensuing year. No annual Minerals Reclamation Fund deposits will be collected from members where the permit Minerals Reclamation Fund deposits divided by the number of bonded acres in the next ensuing year is equal to or greater than $500.

B. Entry into the Minerals Reclamation Fund shall be mandatory for all eligible permittees.

C. Operator deposits into the Minerals Reclamation Fund shall be released or retained under the following conditions:

1. When the operation and reclamation are complete and the reclaimed area is suitable for bond release, Minerals Reclamation Fund deposits for the reclaimed area shall be returned to the operator.

2. When the mining permit is transferred to another permittee and division approval is granted, Minerals Reclamation Fund deposits for the permit may be returned to the transferring permittee.

3. When a mining permit is completely relinquished to another operator, other than in a permit transfer, all of the Minerals Reclamation Fund deposits for the permit shall be returned to the relinquishing operator upon division approval of the relinquishment.

4. After bond release applications are approved by the division, Minerals Reclamation Fund deposits for the permit shall be held or retained according to the following formulas:

a. If the permit Minerals Reclamation Fund balance divided by the number of acres remaining under bond is equal to or greater than $500, Minerals Reclamation Fund deposits for the permit will be released so that the remaining deposits equal $500 per acre for the acres remaining under bond.

Example: 50 acres permitted; 10 acres bonded; 2 acres requested for release; Minerals Reclamation Fund deposits = $4,000;

Minerals Reclamation Fund balance ÷ remaining bonded acres = $500;

$4,000 ÷ (10-2) acres = $500.

b. If the permit Minerals Reclamation Fund balance divided by the number of acres remaining under bond is less than $500, the bond release amount will be determined by dividing the permit Minerals Reclamation Fund deposit by the number of bonded acres including the acres to be released and then multiplying by the number of acres to be released.

Example: 50 acres permitted; 10 acres bonded; 2 acres requested for release; Minerals Reclamation Fund deposits = $3,000;

Minerals Reclamation Fund balance ÷ total bonded acres = Release amount $ per acre;

$3,000 ÷ 10 acres = $300 per acre;

Release amount = $300 per acre x 2 acres = $600.

D. Moneys available in the Minerals Reclamation Fund may be less than the total of all operator deposits due to expenditures for bond forfeiture as required by § 45.2-1238 of the Code of Virginia. Minerals Reclamation Fund refunds are subject to availability of moneys in the Minerals Reclamation Fund and shall be suspended if the fund decreases below $250,000. Payments to the fund are then proportionately assessed until the fund returns to a minimum, $250,000 or bond or other securities are posted as required by the director in accordance with § 45.2-1240 of the Code of Virginia.

E. Minerals Reclamation Fund deposits will be transferred to the successor operator when a permit transfer occurs due to a change in organization status or restructuring that does not involve a complete change of ownership.

Statutory Authority

§ 45.2-103 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 19, Issue 24, eff. September 11, 2003; amended, Virginia Register Volume 38, Issue 13, eff. March 31, 2022.

Website addresses provided in the Virginia Administrative Code to documents incorporated by reference are for the reader's convenience only, may not necessarily be active or current, and should not be relied upon. To ensure the information incorporated by reference is accurate, the reader is encouraged to use the source document described in the regulation.

As a service to the public, the Virginia Administrative Code is provided online by the Virginia General Assembly. We are unable to answer legal questions or respond to requests for legal advice, including application of law to specific fact. To understand and protect your legal rights, you should consult an attorney.