The Kentucky Energy and Environment Cabinet filed an emergency rule that requires mining operations to file a $75,000 reclamation bond to mine a site. The state had previously required mining operations to file a $10,000 reclamation bond.

The cabinet regulates mining operations to minimize their adverse effects on the state’s environment and citizens. As such, mine operators must file a Kentucky surety bond with the state before receiving a mining permit. The bonds provide a financial guarantee that, once a project is finished, the mining operator will reclaim the site according to standards specified in the mining permit. If the operator fails to do so, the state uses the bond funds to reclaim the site.

According to the cabinet’s Reclamation Advisory Memorandum 155 concerning the new surety bond requirements:

“KRS 350.060 (11) requires the cabinet to compute a performance bond amount sufficient to assure completion of reclamation if the work had to be completed by the cabinet in the event of forfeiture. The new regulation has been promulgated to resolve concerns related to the adequacy of certain types of bond amounts previously calculated by the Department.”

Kentucky hadn’t increased its reclamation bond amount in more than 20 years. In a letter sent to the cabinet on May 1, Federal Office of Surface Mining Director Joe Pizarchik outlined the federal government’s concerns that Kentucky was not implementing, administering, enforcing and maintaining its reclamation bond program according to federal law.

“Should Kentucky not correct its bond program deficiencies, it will likely lose approval of all or part of its regulatory program, and OSM will implement a full or partial Federal program in Kentucky. In that case, Kentucky should also expect, in accordance with 30 CFR 736.24, to lose eligibility to receive Federal funding for its abandoned mine land reclamation program.”

To avoid losing control of its mining reclamation program — as well as federal funding — the cabinet issued an emergency rule that raised the required bond amount immediately. According to a press release issued by the cabinet on May 4, the emergency rule will be in effect while the ordinary regulation undergoes the normal review process, which will include public hearings and a legislative subcommittee review.

The increased bonding amount could make it harder for some mine operators to get bonded. When underwriting bonds for amounts greater than $50,000, insurance companies are much more critical of applicants’ qualifying credentials. High bonding amounts in Pennsylvania have made it difficult for many operations to qualify for the Pennsylvania reclamation bonds they need. As such, the Pennsylvania legislature is currently looking for ways to ensure mining operators have access to the bonds.

How exactly Kentucky’s emergency rule will affect mining operators in the state remains to be seen. In the meantime, mining operators looking to purchase a surety bond should contact a surety specialist to discuss their bonding needs.

Texas Alcoholic Beverage Commission (TABC) stakeholders recently met to discuss the potential elimination of liquor and beer tax surety bond requirements.

The current law requires distributors, wholesalers, manufacturers and wineries to file a liquor and/or beer tax bond to protect the state against the anticipated tax liability. To date, however, no claims have ever been made on the bonds, spurring the ABC to consider eliminating the requirements.

According to the Surety and Fidelity Association of America, “Even if there were no claims, without the bond, TABC would lose the benefit of the surety’s prequalification and licenses and permits conceivably could be provided to entities that lack the financial capacity to meet their tax obligations.”

According to the TABC website, the current liquor and beer tax surety bond requirements are as follows.

“The amount is based on an estimate of sales for a six-week period and a minimum of $1,000 for liquor tax and $500 for beer tax. The amount of the bond can increase if it is determined the state is not fully protected for the tax liability. A new liquor tax and/or beer tax bond will be required each time the license or permit holder renews. At the end of your permit year, you can request an audit to determine if all taxes have been paid for that year. If so, you can request release of your liquor tax/beer tax bond. Once you have been in business for 36 months and you have filed all reports and paid all taxes and fees required by the Texas Alcoholic Beverage Commission, you can request exemption from the tax bond requirement by submitting the Application for Bond Exemption Form C-26.”

Although the TABC has not yet experienced losses, stakeholders must consider how — without the financial guarantees provided by Texas surety bonds — the government would step in to collect unpaid taxes from TABC licensee and permittees that might fail to pay taxes in the future.

The new form will be required of collection agencies when they purchase surety bonds for the 2012-2013 licensing renewal cycle that begins July 1. The amount of surety bond protection required of North Carolina collection agencies now ranges from $10,000 to $170,000 depending on the type of enterprise.

Domestic collection agency bond requirement

The initial bond amount for a collection agency permit as a domestic entity (incorporated within North Carolina) is $10,000. Effective with the July 1 annual renewal cycle, bond amounts will range from a minimum of $10,000 to a maximum of $75,000.

Foreign collection agency bond requirement

The initial bond amount for a collection agency permit as a foreign entity (incorporated outside of North Carolina) is $20,000. Effective with the July 1 annual renewal cycle, bond amounts will range from a minimum of $20,000 to a maximum of $85,000. By issuing the bond, the surety also agrees to be liable to the Commissioner of Insurance for the department’s expenses incurred in visiting and examining the principal in connection with a federal bankruptcy or state receivership proceeding in which the principal is the subject.

Alien collection agency bond requirement

The initial bond amount for a collection agency permit as a alien entity (non-U.S. corporation/international) is $40,000. Effective with the July 1 annual renewal cycle, bond amounts will range from a minimum of $40,000 to a maximum of $170,000. The surety also agrees to be liable to the Commissioner of Insurance for the department’s expenses incurred in visiting and examining the principal in connection with a federal bankruptcy or state receivership proceeding in which the principal is the subject.

Download the North Carolina Collection Agency Financial Responsibility Surety Bond.

Nonresident entertainers will mail the original copy of their North Carolina surety bond to:

North Carolina Department of Insurance
Agent Services Division
1204 Mail Service Center
Raleigh NC 27699

The California legislature has proposed an amendment that would change the way truck brokers in the state file their bonds.

The purpose of the existing law was to cut down on broker fraud within California’s trucking industry. Since the law went into effect, however, industry stakeholders claim the bonding requirement has yet to be fully enforced.

The current law — which was signed on September 29, 2010, and enacted January 1, 2011 — requires construction trucking service brokers to purchase a surety bond before providing any construction transportation services to any construction project. The minimum surety bond amount accepted is $15,000. Failing to purchase the bond according to the law is a misdemeanor that could result in a $5,000 fine for the broker.

However, when the law was passed, no state or federal agency was assigned to oversee and report broker bonding infractions. Although brokers were told they must purchase a bond, they were not instructed to file it with any specific government agency. The broker was simply required to present the bond if a law enforcement agency required it.

Brokers were also encouraged to give their contractor and shipper customers a copy of their bond as a show of good business practice, but, they were not actually required to do so. In actuality, brokers are rarely expected to provide proof of their bonds, which means many simply don’t ever purchase one.

As such, industry stakeholders such as the California Construction Trucking Association assert that this lack of accountability allows brokers to skirt the bonding requirement and continue fraudulent brokerage activity.

This year’s SB 1092 would amend the existing law by requiring brokers to provide easy access to copies of their bonds to both industry professionals and clients. After being amended last week, the proposed amendment currently reads as follows.

“This bill would require a broker of construction trucking services to annually provide written evidence of the broker’s valid surety bond to a 3rd-party nonprofit organization that is related to the industry and regularly maintains a published database of bonded brokers or to post a current copy of the surety bond on the broker’s Internet Web site.

The bill also would prohibit a broker of construction trucking services from hiring, or otherwise engaging the services of, a motor carrier of property to furnish construction transportation services unless the broker provides, prior to the commencement of work each calendar year, written evidence of the broker’s valid surety bond to any person that hires, or otherwise engages the services of, the broker to furnish construction transportation services and also to the hired motor carrier of property.”

According to the existing law, a truck broker is defined as “an individual or company who arranges for the truck transportation of cargo belonging to others for compensation, utilizing for-hire carriers to provide truck transportation within the construction industry.” To put it simply, individuals must purchase a California truck broker bond if they manage the transport of construction materials and handle other truckers’ finances in the process.

If this amendment is passed as expected, truck brokers in California would likely have a much harder time avoiding the purchase of a surety bond.

If you’ve ever wondered how surety providers calculate surety bond premiums, look no further. In this short video, SuretyBonds.com answers five frequently asked questions clients have about surety bond costs.

If you’ve ever wondered how to get a surety bond, look no further. SuretyBonds.com developed this six-step video guide to explain exactly how to get a surety bond.

SuretyBonds.com brings you this basic guide to bonding. Check back soon for additional educational videos that explain the surety market.

Before attempting to satisfy the appetites of audiences hungry for amusement, nonresident entertainers much first satisfy the state’s appetite for verifiable financial credibility. The Wisconsin Department of Revenue has released a document that outlines surety bond expectations for nonresident entertainers.

The state defines a nonresident entertainer as “a nonresident person (a person who is not a legal resident of Wisconsin) or a foreign corporation, partnership or other entity that’s not regularly engaged in business in Wisconsin who furnishes amusement, entertainment, public speaking services or performs in sporting events in Wisconsin for a consideration.”

If the total contract price for a performance exceeds $3,200, a nonresident entertainer must file either a surety bond or cash deposit with the Wisconsin Department of Revenue at least seven days before the performance. The amount of the bond or deposit is typically 6% of the total contract price.

Download the Wisconsin Nonresident Entertainer Surety Bond.

Nonresident entertainers will mail the original copy of their Wisconsin surety bond to:

Wisconsin Department of Revenue
P.O. Box 8906
Madison WI 53708

Learning how surety bonds benefit your business now now will allow you to use bonding to your advantage later on.

Bonding promotes successful enterprises in three key ways:

1. by holding business owners to higher industry standards
2. by keeping unqualified individuals from gaining access to certain professions, thus limiting competition
3. by strengthening consumer confidence

Surety bonds allow consumers to hold business owners accountable for their professional performance. Consumers can avoid losing money at the hands of dishonest business professionals by making a claim against their bonds.

For example, say an auto dealer used fraudulent selling tactics and a claim was made on the bond. The surety would use the bond’s funds to pay the claim.

Since surety providers can choose not to bond risky applicants, this infraction could keep the auto dealer from getting a bond in the future. Without the bond, the auto dealer cannot get a license to operate legally, which, in turn, protects consumers from encountering a similar situation in the future.

On the flip side of this discussion, getting bonded also strengthens consumer relations. The bonding process requires a neutral third party (the surety) to verify a principal’s financial stability. When a company is licensed and bonded, consumers know it has met the strict financial guidelines required for getting a bond.  Furthermore, your customers will feel confident knowing your business has the financial guarantee of a bond.

One of the biggest benefits of having surety bond knowledge is being able to get through the application process quicker and easier. When planning to start a new business, you have plenty of time-consuming concerns stressing you out. Don’t let bonding be one of them.

Effective January 1, the Minnesota Construction Codes and Licensing Division of the Department of Labor and Industry now requires mechanical contractors to file their $25,000 surety bonds for two-year terms instead of one-year terms.

Minnesota Statutes 326.992 requires a $25,000 license and permit bond to be filed by those contracted to install certain mechanical equipment. Mechanical professionals subject to the Minnesota surety bond requirement include those who work with

• air conditioning
• ductwork
• fuel burning
• furnaces
• gas piping
• hot water heat
• refrigeration
• ventilation

According to a June 27, 2003, memorandum that outlines the statewide surety bond and filing fee requirements for mechanical work:

This bond is for the benefit of persons suffering financial loss by reason of the contractor’s failure to comply with the requirements of the State Mechanical Code. Furthermore, a statewide surety bond will eliminate duplication of multiple bonds required of mechanical contractors who work in more than one jurisdiction.

Download the Minnesota Mechanical Bond Registration Checklist

Download the Minnesota Mechanical Bond Registration Renewal Packet.

Applicants will submit the original copy of their legally executed Minnesota mechanical surety bond to:

Minnesota Department of Labor and Industry
CCLD: Licensing and Certification Services
PO Box 64220
St. Paul, MN 55164

For more information on the Minnesota mechanical surety bond, contact the Construction Codes and Licensing Division of the Department of Labor and Industry at (800) 657-3944.