30 CFR 800.21 - What additional requirements apply to collateral bonds?

§ 800.21 What additional requirements apply to collateral bonds?

(a) Collateral bonds, except for letters of credit, cash accounts, and real property, are subject to the following conditions:

(1) The regulatory authority must keep custody of collateral deposited by the applicant or permittee until authorized for release or replacement as provided in this part.

(2) The regulatory authority must value collateral at its current market value, not at face value.

(3) The regulatory authority must require that certificates of deposit be made payable to or assigned to the regulatory authority, both in writing and upon the records of the bank or other financial institution issuing the certificates. If assigned, the regulatory authority must require the bank or other financial institution issuing the certificate to waive all rights of setoff or liens against the certificate.

(4) The regulatory authority may not accept an individual certificate of deposit in an amount in excess of the maximum amount insured by the Federal Deposit Insurance Corporation.

(b) Letters of credit are subject to the following conditions:

(1) The letter may be issued only by a bank organized or authorized to do business in the United States;

(2) Letters of credit must be irrevocable during their terms.

(3) The letter of credit must be payable to the regulatory authority upon demand, in part or in full, upon receipt from the regulatory authority of a notice of forfeiture issued in accordance with § 800.50 of this part.

(4) If the permittee has not replaced a letter of credit with another letter of credit or other suitable bond at least 30 days before the letter's expiration date, the regulatory authority must draw upon the letter of credit and use the cash received as a replacement bond.

(c) Real property posted as a collateral bond must meet the following conditions:

(1) The applicant or permittee must grant the regulatory authority a first mortgage, first deed of trust, or perfected first-lien security interest in real property with a right to sell or otherwise dispose of the property in the event of forfeiture under § 800.50 of this part.

(2) In order for the regulatory authority to evaluate the adequacy of the real property offered to satisfy collateral requirements, the applicant or permittee must submit a schedule of the real property to be mortgaged or pledged to secure the obligations under the indemnity agreement. The schedule must include -

(i) A description of the property;

(ii) The fair market value as determined by an independent appraisal conducted by a certified appraiser; and

(iii) Proof of possession and title to the real property.

(3) The property may include land that is part of the permit area. However, land pledged as collateral for a bond under this section may not be disturbed under any permit while it is serving as security under this section.

(4) The appraised fair market value determined under paragraph (c)(2)(ii) of this section is not the bond value of the real estate. In calculating the bond value of real estate, the regulatory authority must discount the appraised fair market value to account for the administrative costs of liquidating real estate, the probability of a forced sale in the event of forfeiture, and a contingency reserve for unanticipated costs including, but not limited to, unpaid real estate taxes, liens, property maintenance expenses, and insurance premiums.

(d) Cash accounts are subject to the following conditions:

(1) The regulatory authority may authorize the permittee to supplement the bond through the establishment of a cash account in one or more federally insured or equivalently protected accounts made payable upon demand to, or deposited directly with, the regulatory authority. The total bond, including the cash account, may not be less than the amount determined under § 800.14 of this part, as modified by any adjustments under § 800.15 of this part, less any amounts released under §§ 800.40 through 800.44 of this part.

(2) Any interest paid on a cash account will be retained in the account and applied to the bond value of the account unless the regulatory authority has approved the payment of interest to the permittee.

(3) Certificates of deposit may be substituted for a cash account with the approval of the regulatory authority.

(4) The regulatory authority may not accept an individual cash account in an amount in excess of the maximum amount insured by the Federal Deposit Insurance Corporation.


(1) The regulatory authority must determine the bond value of all collateral posted as assurance under this section. The bond value must reflect legal and liquidation fees, as well as value depreciation, marketability, and fluctuations that might affect the net cash available to the regulatory authority to complete reclamation.


(i) The regulatory authority may evaluate the bond value of collateral at any time.

(ii) The regulatory authority must evaluate the bond value of collateral as part of the permit renewal process.

(iii) The regulatory authority must increase or decrease the performance bond amount required if an evaluation conducted under paragraph (e)(2)(i) or (ii) of this section determines that the bond value of collateral has increased or decreased.

(iv) In no case may the bond value of collateral exceed the market value of the collateral.

(f) Persons who have an interest in collateral posted as a bond, and who desire notification of actions pursuant to the bond, must request such notification in writing to the regulatory authority at the time that the collateral is offered.

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.

United States Code
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