(a) Lead agencies shall require financial assurances of each surface mining operation to ensure reclamation is performed in accordance with the surface mining operation’s approved reclamation plan, as follows:

1. (1) A financial assurance mechanism may take the form of surety bonds executed by an admitted surety insurer, as defined in subdivision (a) of Section 995.120 of the Code of Civil Procedure, irrevocable letters of credit, trust funds, or other forms of financial assurance mechanisms specified by the board pursuant to subdivision (e) that the lead agency reasonably determines are adequate to perform reclamation in accordance with the surface mining operation’s approved reclamation plan.
2. (2) Financial assurances shall remain in effect for the duration of the surface mining operation and any additional period until reclamation is completed.
3. (3) The amount of the financial assurance cost estimate required of a surface mining operation for any one year shall be reviewed and, if necessary, adjusted once each calendar year to account for new lands disturbed by surface mining operations, inflation, and reclamation of lands accomplished in accordance with the approved reclamation plan. An operator shall be required to replace an approved financial assurance mechanism to bond for the reclamation of the surface mining operation only if the financial assurance cost estimate identifies a need to increase the amount of the financial assurance mechanism.
4. (4) Financial assurance cost estimates shall be submitted to the lead agency for review on a form developed by the supervisor and approved by the board. The form shall be subject to the requirements of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
5. (5) Each financial assurance mechanism shall be made payable to the lead agency and the department. A financial assurance mechanism shall not be released without the consent of the lead agency and the department. A financial assurance mechanism that was approved by the lead agency prior to January 1, 1993, and was made payable to the State Geologist shall be considered payable to the department for purposes of this chapter. However, if a surface mining operation has received approval of its financial assurance cost estimate from a public agency other than the lead agency, the lead agency shall deem those financial cost estimates adequate for purposes of this section, or shall credit them toward fulfillment of the financial cost estimate required by this section, if they are made payable to the public agency, the lead agency, and the department and otherwise meet the requirements of this section. In any event, if a lead agency and one or more public agencies exercise jurisdiction over a surface mining operation, the total amount of financial assurances required by the lead agency and the public agencies for any one year shall not exceed that amount that is necessary to perform reclamation of lands remaining disturbed. For purposes of this paragraph, a “public agency” may include a federal agency.

(b)

1. (1) If the lead agency, or the board when acting as a lead agency, has evidence that an operator may be financially incapable of completing reclamation in accordance with its approved reclamation plan or that the operator may have abandoned the surface mining operation without completing reclamation, the lead agency or the board, when acting as a lead agency, shall conduct a public hearing to determine whether the operator is financially capable of completing reclamation in accordance with the approved reclamation plan or has abandoned the surface mining operation. The hearing shall be noticed to the operator and the supervisor at least 30 days prior to the hearing.

2. (2) If the lead agency or the board, following the public hearing conducted pursuant to paragraph (1), determines that the operator is financially incapable of performing reclamation in accordance with its approved reclamation plan or has abandoned its surface mining operation without completing reclamation, either the lead agency or the supervisor shall do all of the following:

   1. (A) Notify the operator by personal service or certified mail that the lead agency or the supervisor intends to take appropriate action to forfeit the financial assurances and specify the reasons for so doing.
   2. (B) Proceed to take appropriate action to require forfeiture of the financial assurance mechanisms.
   3. (C) Use the proceeds from the forfeited financial assurance mechanisms to conduct and complete reclamation in accordance with the approved reclamation plan. If the surface mining operation cannot be reclaimed in accordance with its approved reclamation plan, or the financial assurance mechanisms are inadequate to reclaim in accordance with its approved reclamation plan, the lead agency or supervisor may use forfeited financial assurance mechanisms to reclaim or remediate mining disturbances as appropriate for the site conditions as determined by both the lead agency and the supervisor. The financial assurance mechanisms shall not be used for any other purpose. The operator is responsible for the costs of conducting and completing reclamation in accordance with the approved reclamation plan or a remediation plan developed pursuant to this section as determined appropriate by both the lead agency and the supervisor that are in excess of the proceeds from the forfeited financial assurance mechanisms.

(d) The lead agency shall have primary responsibility to seek forfeiture of the financial assurance mechanisms and to reclaim mine sites pursuant to subdivision (b). However, if the board is not the lead agency pursuant to Section 2774.4, the supervisor may act to seek forfeiture of the financial assurance mechanisms and reclaim the mine sites pursuant to subdivision (b) only if both of the following occur:

1. (1) The financial incapability of the operator or the abandonment of the surface mining operation has come to the attention of the supervisor.

2. (2) The lead agency has been notified in writing by the supervisor of the financial incapability of the operator or the abandonment of the surface mining operation for at least 15 days, the lead agency has not taken appropriate measures to seek forfeiture of the financial assurance mechanisms and reclaim the mine site, and one of the following has occurred:

   1. (A) The lead agency has been notified in writing by the supervisor that failure to take appropriate measures to seek forfeiture of the financial assurance mechanisms or to reclaim the mine site shall result in actions being taken against the lead agency under Section 2774.4.
   2. (B) The supervisor determines that there is a violation that amounts to an imminent and substantial endangerment to the public health, safety, or to the environment.

   3. (C) The lead agency notifies the supervisor in writing that its good faith attempts to seek forfeiture of the financial assurance mechanisms have not been successful.

      The supervisor shall comply with subdivision (b) in seeking the forfeiture of financial assurance mechanisms and reclaiming mine sites.