A surety bond as financial assurance is subject to the following requirements:

1. (1) The operator shall submit a fully executed corporate surety bond on a form provided by the department and signed by the operator as principal and by a surety insurer certified under SDCL chapter 58-21;
2. (2) The surety bond may only be cancelled after approval by the board. The surety company must give proper written notification, mailed by certified mail return receipt requested, to the board and the operator at least one hundred fifty days prior to cancellation. In the event of cancellation, the surety bond remains in full force and effect and the surety company is not relieved of its liability to cover all reclamation and postclosure liabilities and obligations accrued prior to the date of cancellation unless the operator submits replacement financial assurance that is accepted by the board. If replacement financial assurance is not submitted by the operator and accepted by the board within ninety days after the notice of cancellation is received by the operator, the board may proceed with surety bond forfeiture. The surety company is liable for payment of the forfeited surety bond;
3. (3) The surety bond is not an asset of the operator and may not be canceled, assigned, revoked, disbursed, replaced, or allowed to terminate without board approval. The surety bond may not be assigned for the benefit of creditors, attached, garnished, levied, or executed on, or subject to process issued from any court except for the purpose of enabling this state to effectuate reclamation and environmental cleanup;
4. (4) The surety bond is payable to the department in full upon demand and receipt from the board of a notice that the operator has failed to comply with the provisions of SDCL chapter 45-6B, the rules adopted thereunder, or the mine permit;
5. (5) The surety company must have a minimum of twenty million dollars in net worth;
6. (6) The surety bond is not in excess of ten percent of the surety company's capital surplus account, as shown on a balance sheet attached to the surety bond and certified by a certified public accountant for the most recent annual reporting period;
7. (7) The sum of all surety bonds issued by a surety company as financial assurance for one or more permits held by an operator is not in excess of thirty percent of the surety company's capital surplus account, as shown on a balance sheet attached to the surety bond and certified by a certified public accountant for the most recent annual reporting period;
8. (8) The board may not accept a surety bond from a surety company for any operator, on all permits held by that operator, unless the surety company is licensed with the South Dakota Division of Insurance and is listed in the United States Department of the Treasury Circular 570 as revised;
9. (9) The operator shall provide evidence to board staff at the time a surety bond is submitted that the surety company is in good financial standing and condition, as evidenced by the surety company's A- or better rating from AM Best, or its equivalent from a similar organization;
10. (10) A power of attorney and a notarized attorney-in-fact acknowledgement must be attached to the surety bond;
11. (11) The surety bond provides that the surety and the operator are jointly and severally liable; and
12. (12) The surety bond provides a mechanism for the surety company to give prompt notice to the department and the operator of any action alleging bankruptcy or insolvency of the surety company or a violation that would result in suspension or revocation of the license of the surety company.

Source: 52 SDR 24, effective September 10, 2025 .

General Authority: SDCL 45-6B-81 .

Law Implemented: SDCL SDCL 45-6B-20 , 45-6B-20.1 , 45-6B-21 , 45-6B-24 , 45-6B-55 , 45-6B-91 .