The Bureau of Land Management (BLM) and the Division of Oil, Gas, and Mining (DOGM), State of Utah, require a surface management bond on all 3809 notices and plans of operation. You must file a joint bond. Therefore, the bond contract form must show that the obligor/operator/principal is bound to the United States and State of Utah and the financial instrument must be payable to the United States and State of Utah (U. S. Department of the Interior-BLM and State of Utah, Division of Oil, Gas, and Mining (OGM). The BLM nationwide bond forms enclosed have been edited to include the State of Utah, please initial where we have included the State of Utah.
B. TYPES OF BONDS
1. SURETY BOND
A corporate surety bond consists of a promise by a principal and surety to the United States and the State of Utah that the surety will correct any default should the principal not do so, paying up to the limits of the amount of the bond. A surety bond is a three-way contract between the principal, the surety, and the United States/State of Utah.
When filing a joint bond with the BLM, the Surface Management Surety Bond form (Form 3809-1) must be used.
If filing a joint bond with DOGM, you must submit DOGM's Joint Agency Surety Form MR-6 and DOGM's Reclamation Contract Form MR-RC.
Information Required on a Surety Bond:
a. Bond must be properly executed by principal, including display of corporate seal (if available). The relationship of the signatory to the principal is to be shown on the bond form itself or in an accompanying document.
b. Bond must be properly executed by acceptable surety, with the seal of corporate surety affixed, accompanied by the power of attorney (POA) showing proof of signing authority as suretys representative. Surety bonds must be issued by a qualified surety (insurance company) approved by the Department
of Treasury (see website https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/surety_home.htm and must have a A- or higher
rating on the AM Best requirements pursuant to DOGM requirement R647-4-113.4.11 (see website http://www3.ambest.com/ratings/ratingssearch.asp?SR=1&AltSrc=10).
c. Bond must be at least for the required amount.
d. Principal and surety must be indicated in proper locations on the bond form.
e. The dollar amount must be spelled out, for example, Ten Thousand Five Hundred Fifty and no/100 Dollars ($10,550.00).
f. Execution date on bond must be completed and date must precede the date of filing of bond.
g. Power of Attorney must show that person signing for surety had authority to do so on the date bond was executed. The date must be the same as or earlier than the date the bond was executed. At the end of the POA, there should be a completed certificate indicating that the POA is still valid on a certain date. This certificate must be dated the same date the bond is executed or within a few days thereafter.
2. PERSONAL BONDS
The principal (obligor) may furnish a personal bond in lieu of a surety bond to ensure compliance with all the terms and conditions of a plan of operations on public land.
The BLM accepts three financial forms of personal bonds: Cash Bond, Letter of Credit (LOC), and Certificate of Deposit (CD). The BLM Surface Management Personal Bond form (Form 3809-2) must accompany the financial instrument. The dollar amount must be spelled out on the bond form, for example, Ten Thousand Five Hundred Fifty and no/100 Dollars ($10,550.00). The personal bond form must be notarized.
CASH BOND REQUIREMENTS:
A cash bond must be submitted in the form of a guaranteed remittance, this is, cashiers check, bank draft, certified check, USPS money order, or cash that is deposited in BLM's suspense account when received. The check must be payable in U.S. dollars and issued by a U.S. bank. A check posted with the BLM must be issued to the U. S. Department of the Interior-BLM; and the BLM Surface Management Personal Bond form (Form 3809-2) must accompany the check.
Cash bonds filed with DOGM will be assessed an annual account management fee that must be paid by the operator. If posting with DOGM, you must submit DOGM's Reclamation Contract Form MR-RC along with the cash bond. If submitting a check, it must be payable to Division of Oil, Gas, and Mining (DOGM).
LETTER OF CREDIT (LOC) REQUIREMENTS:
An irrevocable letter of credit issued by a bank organized to do business in the United States.
a. Financial institution must be federally insured or a Federal Reserve Branch bank.
b. When posting a joint bond with the BLM, the bond must be payable to the U. S. Department of Interior-BLM and State of Utah, Division of Oil, Gas, and Mining (OGM), the bond must be payable to both agencies, and the BLM Surface Management Bond form (Form 3809-2) must accompany the LOC. The authorized officer for the BLM is Chief, Branch of Minerals (formerly Chief, Branch of Solid Minerals, Chief of Branch of Minerals Adjudication), Division of Lands and Minerals, Utah State Office, BLM.
If posting the bond with DOGM, you must submit DOGM's Reclamation Contract Form MR-RC and DOGM's joint irrevocable letter of credit Form MR-JointLOC.
c. Initial expiration of the LOC must be not less than 1 year after the date filing with BLM.
d. LOC must contain the automatic renewal provision in at least 1-year increments.
e. LOC must contain provisions allowing collection by BLM for default of obligor and failure of obligor to replace bond if 90-day notice is given by bank that LOC will not be renewed.
CERTIFICATES OF DEPOSIT (CD) REQUIREMENTS:
Federally-insured certificate of deposit payable to the United States and the State of Utah.
a. Financial institution must be federally insured or a Federal Reserve Branch bank.
b. CD must indicate that "The Secretary of the Interior-BLM & OGM is granted full
authority to demand immediate payment in case of default. Approval by the Secretary of Interior-BLM is required prior to redemption of the CD by any party".
c. CD should be issued to or for the benefit of the U. S. Department of the Interior-BLM
(USDOI-BLM) and State of Utah, Division of Oil, Gas, and Mining (OGM), the bond must be payable to both agencies, and the BLM Surface Management Personal Bond form (Form 3809-2) must accompany the CD. The authorized officer for the BLM is Chief, Branch of Minerals (formerly Chief, Branch of Solid Minerals, Chief of Branch of Minerals Adjudication), Division of Lands and Minerals, Utah State Office, BLM.
If posting the bond with DOGM, you must submit DOGM's Reclamation Contract Form MR-RC and DOGM's Cover/Instruction Letter for Joint CD's (Form MR-JointCD) along with the CD.
If CD is issued to another person/company than BLM/DOGM, proof must be provided that the right to payment of the obligor under the CD has been assigned to BLM/DOGM, together with the proof that the bank has changed its records to show that only BLM/DOGM may collect the amount of the CD. A written confirmation is recommended (Assignment form signed by obligor and confirmation form signed by financial institution). A statement on the CD stating that the CD is for the benefit of the BLM/DOGM or the BLM/DOGM is the beneficiary is sufficient. The financial agency must place a hard hold on the CD.
d. The operator/obligor must ensure that the CD can be redeemed prior to maturity. If there are any penalties for early redemption, such penalties will be paid out of the obligors interest earned, not out of the principal amount of the CD. Otherwise CD must be increased.
e. There should be no expiration date for the CD that would restrict the right of the BLM/DOGM to collect the principal at any time of default.
f. It must be clear that the deposit is for the sole and exclusive use of the Department of the Interior-BLM and DOGM. The financial institution must agree to not use the deposit to off-set any monetary default of the Obligor. (Agreement not to off-set form)
POSTING THE BOND WITH THE BLM:
Please contact Opie Abeyta at (801) 539-4123, Mining Law Team, Branch of Minerals, Utah State Office, Bureau of Land Management, 440 W. 200 S., P. O. Box 45155, Salt Lake City, Utah 84145-0155. The authorized officer for the BLM is Chief, Branch of Minerals. If you are posting the bond with the BLM, the bond must be filed with the Utah State Office.
If you are using the bond forms from the Mining Law/Locatable Minerals website, please add the "and State of Utah, Division of Oil, Gas, and Mining (OGM)" to the form after you print it.
POSTING THE BOND WITH DOGM:
Please contact the State of Utah, Division of Oil, Gas, and Mining (DOGM), 1594 S. North Temple, Suite 1210, P. O. Box 145801, Salt Lake City, Utah 84114-5801 (phone number is (801) 538-5340). See http://linux1.ogm.utah.gov/WebStuff/wwwroot/division/tabs.html.