(1) Rules promulgated hereunder that apply to surety bonds shall also apply to certificates of deposit (CD) and other bond equivalents.
(2) A CD may be liquidated for disbursement for the same reasons and in the same manner that surety bond proceeds may be requested for disbursement.
(3) A CD or other bond equivalent shall be on a form approved by the department.
(4) A CD issued by a bank or savings and loan association that is a member in good standing with the federal deposit insurance corporation or the federal savings and loan insurance corporation, respectively may be submitted to the department in lieu of a surety bond for a public warehouseman or a commodity dealer as required by 80-4-504 and 80-4-601, MCA. The CD must be in an amount equal to the otherwise required surety bond.
(5) A CD may be automatically renewable, or for a single maturity. If it is for a single maturity, the CD must be for a term of one year or less.
(6) A CD submitted in lieu of a surety bond shall be held by the department.
(7) All CDs shall be made payable or properly assigned to the department as follows: "Pay to the order of the Director of the Montana Department of Agriculture". If a CD is assigned to the department, written consent of the assignment must be received from the financial institution issuing the certificate.
(8) All interest earned on the CD is to be credited or paid directly to the purchaser of the CD. If interest is paid to the department, it shall be endorsed to the purchaser of the CD. These conditions are valid only if no claim has been made against the CD. In event of a claim the interest earned may become a part of the dispersible proceeds of the CD.
(9) If a licensee desires to terminate a license and requests the return of a CD, the licensee filing the CD must return the license and make written request by registered or certified mail with return receipt for the return of the CD. Upon receipt of the written request and the submission of the license, the director shall hold the CD for a period of 90 days before it is returned. If at the end of the 90 days no claim against the CD has been made, the CD shall be returned, unless the director is of the opinion that claims against the CD may exist. Under these conditions, the director may hold the CD until it is determined that no claims against the CD exist.
(10) If a license issued is revoked, the CD shall be held by the director for a period of 120 days or until the director is satisfied that no claims against the CD exist.
(11) If a licensee desires to remain licensed and requests the return of a CD on file with the director, the licensee shall file with the director a replacement CD, bond, or bond equivalent in an amount required by the director in accordance with 80-4-504 and 80-4-601, MCA. The replacement CD, bond, or bond equivalent must be received, become effective and be in full force and effect on or before the date that the licensee's existing CD is to be returned. The director shall not return the CD until a replacement CD, bond or bond equivalent has been received.
(12) If a reduction in the amount of a CD is permitted by the department, such reduction shall be made by submitting a new CD in the smaller amount approved by the department. The date the CD is to be effective, shall be set by the department and any new liability accrued under the prior CD will transfer to the new CD or its equivalent. The department will release the original CD upon receipt of the reduced CD or its equivalent providing all actions are approved by the department.
(13) In addition to CDs the director may accept irrevocable letters of credit which he deems to be acceptable. All of the provisions that apply to CDs shall apply to these bond equivalents.