Sec. 7.1. (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.

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