§ 14-34-7-7.1 — Collateral and indemnity agreement to support self-bond application

Indiana § 14-34-7-7.1

• Jurisdiction: Indiana
• Art. 34: SURFACE COAL MINING AND RECLAMATION
• Ch. 7: Self-Bonding

Text

1. (a) If an application for self-bonding is
rejected based on the information required by section 4 of this chapter
or limitations set forth in section 4 of this chapter, the applicant may
offer collateral (as defined in section 0.5 of this chapter) and an
indemnity agreement to support the applicant's self-bond application.
An indemnity agreement offered under this subsection is subject to the
requirements of section 7 of this chapter.
(b) The following information must be provided about collateral
offered under subsection (a) to support a self-bond:
(1) The value of the property. The property must be valued at the
difference between the fair market value of the property and
reasonable expenses the department anticipates incurring in
selling the property. The fair market value must be determined by
an appraiser proposed by the applicant. The director may reject an
appraiser proposed by the applicant. An appraisal of property
must be performed expeditiously and a copy of the appraisal must
be furnished to the director and the applicant. The applicant must
pay the cost of the appraisal.
(2) A description of the property, indicating that the property is
satisfactory for deposit under this section, and a statement of:
(A) all liens, encumbrances, or adverse judgments imposed on
the property; and
(B) any pending litigation relating to the property.
(c) The director has full discretion in accepting collateral offered
under subsection (a) to support a self-bond.
(d) Real property offered as collateral under subsection (a) may not
include lands that are in the process of being mined or reclaimed or
lands that are the subject of an application under this chapter. The
operator may offer land that was formerly subject to a bond if the bond
has been released.
(e) Securities offered as collateral under subsection (a) may include
only securities that meet the definition of collateral set forth in section
0.5 of this chapter.
(f) Personal property offered as collateral under subsection (a) must
be in the possession of the operator, must be unencumbered, and may
not include the following:
(1) Property that is already being used as collateral.
(2) Goods that the operator sells in the ordinary course of
business.
(3) Fixtures.
(4) Certificates of deposit that are not federally insured or that are
issued by a depository that is unacceptable to the director.
(g) Evidence of ownership of property offered as collateral under
subsection (a) must be submitted in one (1) of the following forms:
(1) If the property offered is real property, the interest of the
applicant must be evidenced by a title certificate or similar
evidence of title and encumbrance prepared by an abstract office
that is:
(A) authorized to transact business in Indiana; and
(B) satisfactory to the director.
(2) If the property offered is a security, the operator's interest must
be evidenced by possession of the original or a notarized copy of
the certificate or a certified statement of account from a brokerage
house.
(3) If the property offered is personal property, evidence of
ownership must be submitted in a form that:
(A) is satisfactory to the director; and
(B) affirmatively establishes unencumbered title to the property
of the operator.
(h) An applicant that offers personal property as collateral under
subsection (a), in addition to submitting the evidence required by
subsection (g), must satisfy the financial requirements set forth in
section 4(d)(7)(B) and 4(d)(7)(C) of this chapter.
(i) If the director accepts personal property from an applicant as
collateral under subsection (a), the director shall require the following:
(1) Quarterly and annual maintenance reports prepared by the
applicant.
(2) A perfected, first lien security interest in the property in favor
of the department of natural resources. The security interest must
be perfected through:
(A) the filing of a financing statement; or
(B) surrender of possession of the collateral to the department
under subsection (k).
(j) If the director accepts personal property from an applicant as
collateral under subsection (a), the director may require quarterly or
annual inspections of the personal property by a qualified
representative of the department.
(k) If the director accepts personal property from an applicant as
collateral under subsection (a), the director shall, as applicable, require:
(1) possession by the department of the personal property; or
(2) a mortgage or security agreement executed by the applicant in
favor of the department.
(l) The property interest conveyed under subsection (k) vests in the
department to secure the right and power to sell or otherwise dispose
of the property by public or private proceedings so as to ensure
reclamation of the affected lands in accordance with the reclamation
plan.
(m) A mortgage executed under subsection (k)(2) must be executed
and recorded so as to be first in time and constitute notice of the
interest of the department in the property to any prospective subsequent
purchaser of the property.
(n) Any income received from the collateral during the period when
the collateral is in the possession of the department shall be remitted to
the applicant.
(o) If collateral is left in the possession of the applicant, the security
agreement executed under subsection (k)(2) must require that, upon
default, the applicant shall assemble the collateral and make it
available to the department at a place designated by the department that
is reasonably convenient to both parties. All costs of transporting and
assembling the collateral shall be borne by the applicant.
(p) With the consent of the director, an applicant may substitute
other property for any property accepted and held as collateral under
this section. Property may be substituted under this subsection only if:
(1) all the information required concerning property originally
submitted as collateral is provided concerning the proposed
substitute collateral; and
(2) all requirements of this section are met with respect to the
proposed substitute collateral so that all obligations relating to
mining operations are secured under all periods of time.
(q) If collateral is posted under subsection (a) to support a self-bond,
the applicant shall:
(1) notify all persons that have an interest in the collateral of the
posting of the collateral and of all other actions affecting the
collateral; and
(2) provide copies of the notices provided under subdivision (1)
to the director.

Legislative History

As added by P.L.176-1995, SEC.17.