DEPARTMENT OF ENVIRONMENTAL PROTECTION
RULE NO.:RULE TITLE:
62-342.700Financial Responsibility
NOTICE OF CHANGE
Notice is hereby given that the following changes have been made to the proposed rule in accordance with subparagraph 120.54(3)(d)1., F.S., published in Vol. 43 No. 246, December 22, 2017 issue of the Florida Administrative Register.
THE FULL TEXT OF THE PROPOSED CHANGE:
62-342.700 Financial Responsibility.
(1) No change.
(2) Submitting Financial Responsibility Documentation. The applicant shall provide draft documentation of the cost estimate and required financial responsibility mechanisms described in subsections 62-342.700(5) through (11) and 62-342.700(13), F.A.C., with the permit application, and shall submit to the Agency the executed or finalized documentation within the time frames specified in the permit. The provisions of this section shall also apply to any modifications to the Mitigation Bank Permit.
(3) No change.
(4) Financial Responsibility for Construction and Implementation.
(a) through (b) No change.
(c) The amount of financial responsibility established shall equal 110 percent of the cost of construction and implementation of the Mitigation Bank, or each phase thereof, in accordance with subsection 62-342.700(13), F.A.C., and as adjusted in accordance with subsection 62-342.700(14), F.A.C., during the course of the project. When the bank has been completely constructed, implemented, and is trending toward success in compliance with the permit, the respective amount of financial responsibility shall be released.
(d) No change.
(5) Surety or Performance Bond.
(a) A banker may satisfy the requirements of subsection 62-342.700(1)62-342.700(4), F.A.C., by obtaining a surety or performance bond that conforms to the requirements of this subsection. The company issuing the bond must be authorized to do business in Florida. The company must also be among those listed as acceptable sureties in the latest Circular 570 of the U.S. Department of the Treasury (July 1, 2017), which is incorporated by reference herein and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX, or a Florida-domiciled surety or insurance company with at least an A-+ rating from in A.M. Best’s Key Rating Guide and authorized to write individual bonds up to 10 percent of the policyholder’s surplus. The banker shall provide documentation evidencing that the bond company meets these requirements.
(b) The surety or performance bond shall be worded in substantial conformance with Form 62-342.700(5), “Mitigation Bank Performance Bond to Demonstrate (Construction and Implementation or Perpetual Management) Financial Assurance” (effective date), which is incorporated by reference herein and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-05067. This form and all the forms incorporated in Rule 62-342.700, F.A.C., also are available from the Department of Environmental Protection’s Internet site, https://floridadep.gov/water/submerged-lands-environmental-resources-coordination/content/forms-environmental-resourcehttp://www.dep.state.fl.us/water/wetlands/erp/forms.htm; or by contacting the Division of Water Resource Management, Department of Environmental Protection, 2600 Blair Stone Road, MS #2500, Tallahassee, Florida 32399-2400, (850)245-8336. Deviations from the form shall be identified and submitted to the Agency for review and approval.
(c) through (e) No change.
(f) A bond may be canceled by the banker if the Agency has given prior written consent. The Agency shall provide such consent when either the banker substitutes alternative financial assurance allowed under this rule and such alternate financial assurance is approved by the Agency and is effective or the Agency approves release of financial assurance in accordance with paragraph 62-342.700(4)(c), F.A.C. releases the banker from the requirements of this subsection.
(6) Irrevocable Letter of Credit.
(a) A mitigation banker may satisfy the requirements of subsection 62-342.700(1) 62-342.700(4), F.A.C., by obtaining an irrevocable letter of credit that conforms to the requirements of this subsection. The irrevocable letter of credit shall be provided by a federally insured depository that is “well capitalized” or “adequately capitalized” as defined in Section 38 of the Federal Deposit Insurance Act [12 USC 1831o(b)], incorporated by reference herein and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXXX. The banker shall submit documentation evidencing that the federally insured depository is appropriately capitalized.
(b) The irrevocable letter of credit shall be worded in substantial conformance with Form 62-342.700(6), “Mitigation Bank Irrevocable Letter of Credit to Demonstrate (Construction and/ Implementation or Perpetual Management) Financial Assurance” (effective date) [available at http://www.flrules.org/Gateway/reference.asp?No=Ref-05068 and as described in paragraph (5)(b) above], incorporated by reference herein. Deviations from the form shall be identified and submitted to the Agency for review and approval.
(c) through (d) No change.
(7) Insurance Policy.
(a) A mitigation banker may satisfy the requirements of subsection 62-342.700(1)62-342.700(4), F.A.C., for construction and implementation activities by obtaining an insurance policy that conforms to the requirements of this subsection. The insurance policy shall be provided by an insurance company that is authorized to transact insurance in the State of Florida or is an eligible surplus lines insurer in the State of Florida, and has at least an A-+ rating fromin the A.M. Best’s Key Rating Guide. The banker shall provide documentation to the Agency evidencing that the insurance company meets these requirements.
(b) The insurance policy must be worded in substantial conformance to Form 62-342.700(7), “Mitgation Bank Insurance Coverage Form” (effective date), incorporated by reference herein [available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXX and as described in paragraph (5)(b) above]. Deviations from the form to meet insurance company documentary requirements must satisfy all criteria listed on the "Mitigation Bank Insurance Coverage Form” and be identified and submitted to the Agency for review and approval.
(c) through (d) No change.
(e) Under the terms of the insurance policy, the Agency must have the authority to file claims when the banker either fails to perform under the terms of the mitigation bank permit, as determined solely by the Agency, or fails to replace the insurance policy with an alternative financial responsibilty mechanism prior to the termination of the insurance policy. The insurance policy must afford the Agency with the sole authority to determine whether the action taken or proposed to be taken by the insurance company is sufficient to satisfy a claim made by the Agency. A claim is satisfied when the amount received by the Agency is greater than or equal to the most recent approved cost estimate or adjustment in accordance with subsections 62-342.700(13) and 62-342.700(14), F.A.C., respectively, and the bank is in compliance with the terms of the permit.
(f) through (g) No change.
(8) Escrow.
(a) A mitigation banker may satisfy the requirements of subsection 62-342.700(1)62-342.700(4), F.A.C., by a deposit of cash into an interest-bearing escrow account with the Florida Department of Financial Services.
(b) The escrow agreement must be worded in substantial conformance to Form 62-342.700(8), “Escrow (Standby Escrow) Agreement” (effective date), incorporated by reference herein [available at http://www.flrules.org/Gateway/reference.asp?No=Ref-XXXX and as described in paragraph (5)(b) above]. Deviations from the form must be identified and submitted to the Agency for review and approval.
(c) The escrow agreement must be irrevocable until the Agency approves release of financial security in accordance with paragraph 62-342.700(4)(c), F.A.C., determines it is no longer required and authorizes a final payout.
(9) Standby Escrow.
(a) No change.
(b) The standby escrow agreement shall be worded in substantial conformance with Form 62-342.700(8), F.A.C., incorporated by reference in paragraph subsection 62-342.700(8)(b), F.A.C., except that the agreement will identify that it is establishing a standby escrow account. Deviations from the form must be identified and submitted to the Agency for review and approval.
(c) No change.
(10) Standby Trust Fund.
(a) No change.
(b) The standby trust agreement shall be worded in substantial conformance with Form 62-342.700(10), “Mitigation Bank Standby Trust Fund Agreement to Demonstrate (Construction and Implementation or Perpetual Management) Financial Assurance” (effective date) [available at http://www.flrules.org/Gateway/reference.asp?No=Ref-05069 and as described in paragraph (5)(b) above], incorporated by reference herein. Deviations from the form shall be identified and submitted to the Agency for review and approval. This form and Form 62-342.700(11), incorporated in subsection Rule 62-342.700(11), F.A.C., references the Investment Company Act of 1940, as amended, 15 U.S.C. 80a‑1 et seq. (February 19, 2015), which is incorporated by reference herein and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-05064 and as described in paragraph (5)(b) above. A copy of the Act may also be obtained by contacting the Division of Water Resource Management, Department of Environmental Protection, 2600 Blair Stone Road, MS #2500, Tallahassee, Florida 32399-2400, (850)245-8336.
(11) Trust Fund.
(a) A mitigation banker may satisfy the requirements of subsection 62-342.700(1)62-342.700(4), F.A.C., by establishing a trust fund that conforms to the requirements of this section. The trustee of the trust fund shall be an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a federal agency or an agency of the State of Florida. The banker shall provide documentation evidencing proof of such regulation and examination to the Agency.
(b) The trust fund agreement must be worded in substantial conformance to Form 62-342.700(11), “Mitigation Bank Trust Fund Agreement to Demonstrate (Construction and Implementation or Perpetual Management) Financial Assurance” (effective date) [available at http://www.flrules.org/Gateway/reference.asp?No=Ref-05070 and as described in paragraph (5)(b) above], incorporated by reference herein. Deviations from the form shall be identified and submitted to the Agency for review and approval.
(12) Financial Responsibility for Perpetual Management.
(a) A banker shall establish financial assurance for the perpetual management of the Mitigation Bank, or phases thereof, using the financial responsibility mechanisms described in subsections 62-342.700(5) through 62-342.700(11), F.A.C., except that an insurance policy under subsection 62-342.700(7), F.A.C., may not be used. When an escrow agreement or trust fund agreement is used, the requirements of subsections 62-342.700(8) and 62-342.700(11), F.A.C., respectively, must be met andexcept all references to perpetual management construction and implementation in Forms 62-342.700(8) and 62-342.700(11) shall be selected changed to perpetual management. When a surety bond, performance bond, guarantee bond, or letter of credit is used, a standby trust fund agreement must be established by the banker, and the requirements of subsections 62-342.700(5), 62-342.700(6), 62-342.700(9) and 62-342.700(10), F.A.C., respectively, must be met andexcept all references to perpetual management construction and implementation in Forms 62-342.700(8) and 62-342.700(11) shall be selected changed to perpetual management.
(b) through (c) No change.
(13) through (15) No change.
Rulemaking Authority 373.4131, 373.4135(1), 373.4136(11) FS. Law Implemented 373.4131, 373.4135, 373.4136, 403.0877 FS. History–New 2-2-94, Formerly 17-342.700, Amended 12-12-94, 9-12-95, 5-21-01, 2-19-15, .
Changes were also made to the forms incorporated by reference:
- Added language displaying the number of the rule in which the form is incorporated, as well as the date and statute.
- Corrected titles of forms in footer and provided selections for form applicability.
