A. After a surface coal mining and reclamation permit application has been approved but before the permit is issued, the applicant shall file with the director, on a form prescribed and furnished by the director, a bond for performance payable to the state, and conditioned upon faithful performance of all the requirements of the Surface Mining Act and the permit. The bond shall cover that area of land within the permit area upon which the operator will initiate and conduct surface coal mining and reclamation operations within the initial term of the permit. As succeeding increments of surface coal mining and reclamation operations are to be initiated and conducted within the permit area, the permittee shall file with the director an additional bond or bonds to cover such increments in accordance with this section. The amount of the bond required for each bonded area shall depend upon the reclamation requirements of the approved permit; shall reflect the probable difficulty of reclamation giving consideration of such factors as topography, geology of the site, hydrology and revegetation potential, and shall be determined by the director. The amount of the bond shall be sufficient to assure the completion of the reclamation plan if the work had to be performed by the director in the event of forfeiture, and in no case shall the bond for the entire area under one permit be less than ten thousand dollars ($10,000).

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B. Liability under the bond shall be for the duration of the surface coal mining and reclamation operation and for a period coincident with the operator’s responsibility for revegetation requirements in Section 19 [69-25A-19 N.M. Stat. Ann.] of the Surface Mining Act. The bond shall be executed by the operator and a corporate surety licensed to do business in the state, except that the operator may elect to deposit cash, negotiable bonds of the United States government or the state or negotiable certificates of deposit of any bank organized or transacting business in the United States. The cash deposit or market value of such securities shall be equal to or greater than the amount of the bond required for the bonded area.

C. The director may accept the bond of the applicant itself without separate surety when the applicant demonstrates to the satisfaction of the director the existence of a suitable agent to receive service of process in New Mexico, and:

(1)     a history of financial solvency and continuous operation within or without New Mexico sufficient for authorization to self-insure such amount;

(2)     the existence of other corporate bond coverage maintained by the applicant and arising from an insurance exchange such as Lloyd’s of London, a mutual insurance association or a reciprocal insurance association, provided that such other corporate coverage be legally enforceable within New Mexico, notwithstanding that some or all member companies of such associations or exchanges may not be companies authorized to do business in the United States, provided that the director

may require periodic review of the coverage maintained by the applicant pursuant to this provision following the issuance of a permit; or

(3)     the existence of a letter of credit constituting a binding commitment to extend credit in such amount, issued by a national or state bank chartered to do business within the United States or within any one of the states. The letter of credit shall provide for payment to the state upon such conditions as the director shall make at the time of the granting of the permit, provided that no payment pursuant to such letter of credit shall be required prior to a hearing before the commission at which the operator shall have an opportunity to contest the requirement of payment, which hearing shall be held pursuant to the requirements of Section 29 [69-25A-29 N.M. Stat. Ann.] of the Surface Mining Act.

D. Cash or securities so deposited shall be deposited upon the same terms as the terms upon which surety bonds may be deposited.

E. The amount of the bond or deposit required and the terms of each acceptance of the applicant’s bond shall be adjusted by the director from time to time as affected land acreages are increased or decreased or where the cost of future reclamation changes.