Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
350.020,
350.060,
350.062,
350.064,
350.068,
350.151,
350.465
NECESSITY, FUNCTION, AND CONFORMITY: KRS Chapter 350 in
pertinent part provides authority for the cabinet to approve the cancellation
of surety bonds upon notice by the surety when a notice of noncompliance is
issued for failure to maintain contemporaneous reclamation. This administrative
regulation specifies the procedures and criteria for surety bond cancellation.
This administrative regulation also sets forth certain notice and hearing
requirements relating to surety bond cancellation.
Section 1. Procedures for Request for and
Notice of Surety Bond Cancellation.
(1) Notice
of intent to cancel.
(a) After the issuance,
on or after July 13, 1984, of a notice of noncompliance for failure to maintain
contemporaneous reclamation, the surety obligated on the performance bond for
the permit or any increment thereof may send notice to the insured and to the
department, of its intent to request cancellation of bond coverage on any area
disturbed after thirty (30) days from the effective date of the surety's notice
of intent to cancel, if the violation is not abated.
(b) The notice of intent to cancel shall be
sent by certified mail, return receipt requested, to the insured, and a copy to
the Director of the Division of Field Services, of the department. The
effective date of the notice of intent to cancel shall be the date on which it
is received by the insured or seven (7) days after mailing of the notice by
certified mail, return receipt requested, to the address contained on the
permit application and any other address known to the insurer, whichever occurs
first.
(c) The notice of intent to
cancel shall be signed by an officer, director, or attorney-in-fact of the
surety company and contain at a minimum the following:
1. Name of permittee;
2. Permit number and increment number, if
applicable;
3. Name of
surety;
4. Bond number and
amount;
5. Date of issuance of
notice of noncompliance and noncompliance number;
6. Date of notice of intent to cancel;
and
7. A copy of a
power-of-attorney, if applicable.
(2) Notice of cancellation.
(a) If the surety elects to cancel pursuant
to its notice of intent to cancel, the surety shall send a notice of
cancellation to the insured by certified mail, return receipt requested. A copy
of said notice shall also be sent to the Director of the Division of Field
Services by certified mail, return receipt requested.
(b) The notice of cancellation shall be on a
form specified by the cabinet and shall be sworn to by an officer, director or
attorney-in-fact of the surety, notarized and contain at a minimum the
following:
1. Name of permittee and permit
number;
2. Increment number, if
applicable;
3. Name of surety and
bond number;
4. Date of issuance of
notice of noncompliance and noncompliance number;
5. Date the notice of intent to cancel was
received by permittee;
6. Date of
notice of cancellation;
7. A
statement that the violation has not been abated within thirty (30) days of the
effective date of the notice of intent to cancel;
8. A statement that the surety acknowledges
that it will not be relieved of its liability for areas disturbed prior to the
department's approval of cancellation;
9. A request for the cabinet to approve the
notice of cancellation; and
10. A
copy of a power-of-attorney, if applicable.
(c) The notice of cancellation shall become
effective upon the cabinet's approval.
(3) Cabinet approval of cancellation. Within
thirty (30) days of receipt of the notice of cancellation, the cabinet shall
approve the surety's notice of cancellation in writing, only if the following
conditions exist:
(a) The violation has not
been abated by the permittee; and
(b) The surety has complied with the notice
requirements of subsection (1) and (2) of this section; and
(c) The cabinet has:
1. Revoked the permit by order of the
commissioner of the department; or
2. Deleted the area subject to the
cancellation by order of the commissioner of the department; or
3. Accepted and approved a substitute bond
submitted by the permittee.
Section 2. Procedures for Permit Revocation
or Deletion of the Areas Subject to Cancellation. The cabinet shall by order
delete the areas subject to bond cancellation or revoke the permit for the
entire permit area within thirty (30) days from receipt of the surety's notice
of cancellation, without prior hearing, unless an acceptable substitute bond
has been submitted to the cabinet.
(1) The
order shall be issued by the commissioner of the department, without prior
hearing, based upon information available to the cabinet and the surety's
notice of cancellation.
(2) The
permittee may request a hearing on the order of the commissioner pursuant to
KRS
224.081(2).
(a) A hearing requested pursuant to
KRS
224.081(2) shall be
requested within thirty (30) days of entry of the order of the
commissioner.
(b) The order of the
commissioner shall be affirmed unless the permittee can affirmatively establish
that bond coverage was not cancelled and the violation was abated at the time
of entry of the commissioner's order, or that substitute bond was approved by
the cabinet.
(c) Within thirty (30)
days after entry of the order of the commissioner, the order may be rescinded
if the permittee can demonstrate that a substitute bond has been accepted and
approved by the cabinet and the violations have been abated.
Section 3. Procedures
for Bond Release or Forfeiture After Approval of Cancellation.
(1) The cabinet shall not release any portion
of a bond for a permit area or increment thereof, including but not limited to
undisturbed acreage, after cancellation, unless and until all disturbed areas
on the permit or increment have been reclaimed to the standards set forth in
KRS Chapter 350 and the administrative regulations promulgated pursuant
thereto, or substitute bond has been filed and approved by the cabinet and the
substitute surety has expressly assumed liability for all disturbed areas of
the permit or increment.
(2) In the
event of bond forfeiture the entire bond held by the cabinet shall be forfeited
upon order of the secretary pursuant to KRS Chapter 350 and the administrative
regulations pursuant thereto.
STATUTORY AUTHORITY: KRS Chapter 13A, 350.020, 350.028,
350.060, 350.064, 350.151, 350.465