(a) Except as provided in (c) and (g) of this section, after an application for a permit has been approved and before the permit may be issued, the applicant must file with the commissioner, on a form prescribed and furnished by the commissioner, a performance bond payable to the State of Alaska and conditioned on faithful performance of the requirements of this chapter and the permit. The bond must cover the area of land within the permit area on which the applicant will initiate and conduct surface coal mining and reclamation operations within the initial term of the permit. As succeeding increments of surface coal mining and reclamation operations are initiated and conducted within the permit area, the permittee shall provide an additional bond or bonds to cover those increments in accordance with this section. The amount of the bond required for an area within the permit area shall be determined by the commissioner and shall reflect the probable difficulty of the reclamation considering the topography, geology, hydrology, revegetation potential, and similar factors relating to the area. The amount of the bond must be sufficient to assure the completion of the reclamation plan by the commissioner in the event of forfeiture and, for the entire permit area, may not be less than $10,000.

(b) Liability under the bond must exist for the duration of the surface coal mining and reclamation operation and for the period of time of the permittee's responsibility under the performance standards established by regulation under AS 27.21.210. The bond shall be executed by the applicant and, except as provided in (d) of this section, a corporate surety licensed to do business in the state.

(c) An applicant may deposit with the commissioner cash, negotiable bonds of the United States or of the state, or negotiable certificates of deposit of a bank organized or transacting business in the United States to satisfy the requirements of (a) of this section if

(1) the value of the deposit is equal to or greater than the amount of the bond required under (a) of this section;

(2) liability under the deposit is for a period of time described in (b) of this section; and

(3) the deposit is made under the terms that, under (a) of this section, would apply to a performance bond.

(d) The commissioner may accept a bond executed by the applicant without separate surety if the applicant demonstrates to the satisfaction of the commissioner that the applicant has sufficient financial means for the purposes of the bond. The commissioner shall adopt regulations to implement this section.

(e) The commissioner shall maintain a deposit under (c) of this section in a separate escrow account and shall annually pay the interest accruing on the deposit to the permittee.

(f) The commissioner shall adjust the amount required under (a), (c), or (d) of this section and the terms of the acceptance of that amount if the commissioner determines there is good cause, including changes in affected land areas or in the probable cost of future reclamation, for the adjustment.

(g) As an alternative to performance bonds, applicants conducting surface coal mining and reclamation operations may use the bonding pool established by the commissioner under AS 27.19.040(b) for reclamation activities to meet the requirements imposed by this section.