North Carolina Reclamation Bond: A Comprehensive Guide
July 18, 2022
This guide provides information for insurance agents to help their customers obtain a North Carolina Reclamation bond
At a Glance:
- Average Cost: Between 3% to 5% of the bond amount per year
- Bond Amount: Maximum of $1 million (more on this later)
- Who Needs it: All businesses seeking to mine for minerals, ores, or other solid matter in North Carolina
- Purpose: To ensure that the Department of Environment and Natural Resources will receive compensation if the business does not return altered land to its original condition
- Who Regulates Mining Permits in North Carolina: The North Carolina Department of Environment and Resources
North Carolina Statute 74-50 requires businesses seeking to conduct mining operations to obtain a permit with the Department of Environment and Natural Resources. The North Carolina legislature enacted the permitting requirement to ensure businesses return mined land to its original condition. To provide financial security for the enforcement of the permitting law, businesses seeking to mine within the state must purchase and maintain a surety bond to be eligible for a permit.
What is the Purpose of the North Carolina Reclamation Bond?
North Carolina requires businesses seeking to mine minerals, ore, or other solid materials to purchase a surety bond as a prerequisite to obtaining a permit. The bond ensures that the Department of Environment and Natural Resources will receive compensation for financial harm if the business fails to abide by the regulations outlined in North Carolina Statute 74-54. Specifically, the bond protects the department if the business does not return all altered land to its original condition. In short, the bond is a type of insurance that protects the Department of Environment and Natural Resources if the business violates the terms of its permit.
How Can an Insurance Agent Obtain a North Carolina Reclamation Surety Bond?
BondExchange makes obtaining a North Carolina Reclamation Bond easy. Simply login to your account and use our keyword search to find the “Reclamation” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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How is the Bond Amount Determined?
North Carolina Statute 74-54 grants the Department of Environment and Natural Resources the authority to set the required bond amount on a case-by-case basis, provided that the limit does not exceed $1 million. When determining the amount, the department will use a range of between $500 to $5,000 per acre of land that must be reclaimed and will consider the total estimated reclamation costs per acre.
Is a Credit Check Required for the North Carolina Reclamation Bond?
Surety companies will run a credit check on the owners of the business conducting mining operations to determine eligibility and pricing for the North Carolina Reclamation bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit,” meaning that the credit check will not affect the owner’s credit.
How Much Does the North Carolina Reclamation Bond Cost?
The North Carolina Reclamation Bond will typically cost between 3% to 5% of the bond amount per year based on factors such as your customer’s credit score and years of business experience. Underwriters will want to review your customer’s personal and business financial statements for bonds with limits of $50,000 or more.
To obtain a quote on your customer’s bond, give us a call at (800) 438-1162.
Who is Required to Purchase the Bond?
North Carolina requires businesses seeking to conduct mining operations in the state to purchase a surety bond as a prerequisite to obtaining a permit. To paraphrase North Carolina Statute 74-49, “mining” is defined as any of the following activities:
- Breaking surface soil to extract minerals, ore, or other solid matter as well as all activities that contribute to this process
- Making extracted materials suitable for commercial, construction, or industrial use
Exemptions to this definition include:
- Deep mining activities having little impact on the surface when the affected land does not exceed one acre in area
- Mining operations not exceeding one acre in area
- Plants that process minerals that have been produced elsewhere as long as their refuse does not affect more than one acre of land
- Excavations done for the sole purpose of finding a natural deposit
- Excavations or grading activities that meet all of the following conditions:
- Is done to provide soil or other unconsolidated material for a project that has an approved erosion and sedimentation control plan
- The affected land does not exceed 5 acres
- Is completed within one year
- Does not involve blasting, removing materials from rivers or streams, or disposing of off-site waste on the affected land
- Is not in violation of a local ordinance
- Excavations or grading activities done for agricultural purposes
How Do Businesses Apply for a North Carolina Mining Permit?
Businesses in North Carolina must navigate several steps to obtain a mining permit. Below are the general guidelines, but permittees should refer to the application form for details on the process.
Step 1 – Attend a Pre-Application Meeting
Though not required, the Department of Environment and Natural Resources recommends that permit applicants meet with their local department office for a pre-application meeting. The department will walk the permittee through the application process and answer any questions they may have.
Step 2 – Complete a Reclamation Plan
Permittees must complete a reclamation plan and submit it with their permit application. The plan must illustrate how the applicant intends to return the altered land to its original condition and follow the provisions in North Carolina Statute 74-53.
Step 3 – Complete the Application
All North Carolina Mining Permit applications, including all required fees (see page 3 of the application) should be mailed to the following address:
Department of Environmental Quality
1612 Mail Service Center
Raleigh, NC 27699-1612
Permittees must submit six copies of their application, including all required maps. Additionally, permittees may need to attend a public hearing on their application if the department deems it necessary.
Step 4 – Purchase a Surety Bond
After approving the permittee’s application, the department will provide them with their required bond amount.
What are the Insurance Requirements for the North Carolina Mining Permit?
North Carolina does not require businesses to purchase any form of liability insurance as a prerequisite to obtaining a mining permit. However, they may be required to purchase insurance before receiving a business license. Permittees must purchase and maintain a surety in an amount determined by the Department of Environment and Natural Resources.
How Do Businesses File Their North Carolina Reclamation Bonds?
Businesses should mail their completed bond forms, including the power of attorney, to the following address:
Department of Environmental Quality
1612 Mail Service Center
Raleigh, NC 27699-1612
The surety bond requires signatures from the surety company that issues the bond and the applicant. The surety company should include the following information on the bond form:
- Legal name and address of the entity/individual(s) buying the bond
- Surety company’s name and address
- Bond amount
- Date the bond is signed
- Date the applicant’s permit was approved
What Can Businesses do to Avoid Claims Made Against Their North Carolina Reclamation Bonds?
To avoid claims against their Reclamation bonds, businesses in North Carolina must ensure that they fully follow through with their reclamation plans.
What Other Insurance Products Can Agents Offer North Carolina Reclamation Bondholders?
Most reputable businesses that need a Reclamation bond will also purchase liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for North Carolina Reclamation Bond Customers?
North Carolina conveniently provides a public database of active mining permits in the state. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.