(1) An owner may satisfy the bonding requirements of this subchapter by submitting a letter of credit that:
(a) is issued by a bank organized or authorized to do business in the United States;
(b) is irrevocable prior to being released by the department;
(c) is payable to the department in part or in full upon demand and receipt from the department of a notice of forfeiture issued in accordance with ARM 17.86.122;
(d) provides, upon expiration, if the department has not notified the bank in writing that a substitute bond has been provided or is not required, the bank shall immediately pay the department the full amount of the letter of credit less any previous drafts;
(e) is not for an amount in excess of 10 percent of the bank's capital surplus account as shown on a balance sheet certified by a certified public accountant and submitted to the department with the letter of credit;
(f) is for an amount that does not exceed three times the bank's maximum single obligation; and
(g) is automatically renewable annually on the letter of credit anniversary date.
(2) The department shall review a bank's qualifications annually before a letter of credit is renewed. If the department determines that a bank has become unable to fulfill its obligations under the letter of credit, the department shall, in writing, notify the owner and specify a reasonable period, not to exceed 90 days, in which the owner shall replace the bond.