405 KAR 10:025. Extension of performance
bond subsidization.
RELATES
TO: KRS 350.020, 350.060, 350.062, 350.064, 350.093, 350.095, 350.100, 350.110,
350.151, 350.465, 350.500 – 350.521
STATUTORY
AUTHORITY: KRS 350.060, 350.062, 350.064, 350.093, 350.095, 350.100, 350.151,
350.465, 350.518(5)
NECESSITY,
FUNCTION, AND CONFORMITY: KRS Chapter 350 authorizes the cabinet to promulgate
administrative regulations to ensure bonds are adequate to perform reclamation
in the event of forfeiture. This administrative regulation establishes
information related to the operation of the Kentucky Reclamation Guaranty Fund.
Section
1. Applicability. This administrative regulation shall apply only to an entity
seeking to obtain by transfer the permit of a current member of the KRGF who
was a member of the former Kentucky Voluntary Bond Pool.
Section
2. Performance Bond Subsidization. (1) Performance bond subsidization shall be
extended to an applicant who was not a member of the former voluntary bond pool
fund prior to its dissolution if the:
(a)
Applicant intends to obtain its permit by transfer from a member of the former
Kentucky Voluntary Bond Pool;
(b)
Permit to which the applicant intends to succeed meets one (1) or more of the
criteria for the cabinet to seek bond forfeiture under 405 KAR 10:050, Section
3;
(c)
Applicant meets the requirements of this administrative regulation; and
(d)
Commission determines it is in the best interest of the KRGF pursuant to KRS
350.509(1).
(2)
If the commission determines the criteria for performance bond subsidization
extension have been met, the bonds previously issued by the KRGF to the member
of the former voluntary bond pool fund shall be substituted for bonds newly
issued by the KRGF in accordance with the provisions of 405 KAR 10:015, Section
5.
(3)
Subsequent to the extension of performance bond subsidization for the issuance
of a successor permit pursuant to subsection (2) of this section, the KRGF may
extend additional subsidization to the permittee for the permit to enable the
permittee to complete mining and reclamation operations, if the commission
determines it is in the best interest of the KRGF. The commission shall review
an applicant’s ability to meet the approval requirements of this administrative
regulation upon application for additional subsidization.
(4)
Only a permit with a bond previously covered by the former voluntary bond pool
fund shall be eligible for performance bond subsidization. Other permits held
by the applicant shall not be subsidized by the KRGF.
Section
3. Applicant Criteria. (1) Applicants for extension of performance bond
subsidization shall submit an application on the Application for Performance Bond
Subsidization for Permit Succession, RGF-4 form, which shall include:
(a)
Identification of the permittee which the applicant wishes to succeed;
(b)
Identification of permits the applicant intends to obtain by transfer;
(c)
Information regarding the financial standing and compliance record of the
applicant; and
(d)
Any other information the commission needs to make a determination.
(2)(a)
The commission shall consider applications on a case-by-case basis and meeting
the criteria under this section shall not be grounds for automatic performance
bond subsidization. An applicant shall be allowed thirty (30) calendar days
after receipt of the commission’s determination to contest the determination in
writing.
(b)
The written notice shall include:
1.
An explanation of the nature of the contest; and
2.
The documentation relied upon by the applicant.
(3)
The applicant for extended performance bond subsidization shall be in good
financial standing. The financial standing of the applicant shall be determined
based upon the financial information required in the application and other
information available to the KRGF and the cabinet. The commission shall
consider the financial ratios of:
(a)
Current assets to current liabilities;
(b)
Net income to net sales;
(c)
Total liabilities to stockholders’ equity;
(d)
Net income to owners’ equity;
(e)
Owners’ equity to total assets; and
(f)
The sum of cash, marketable securities, and net receivables, to current
liabilities.
(4)
The applicant for extended performance bond subsidization shall have held,
under the same name or other name as provided in subsection (5) of this
section, a permit issued by the cabinet to conduct surface mining operations in
Kentucky or by an authorized agency governing surface mining operations in
another state or territory, for a period of at least five (5) of the seven (7)
years immediately preceding the application for extended performance bond subsidization,
and have exhibited an approved compliance record as detailed by Section 4 of
this administrative regulation.
(5)
If the applicant cannot satisfy the requirements of subsection (4) of this section,
then the following types of permits held by persons other than the applicant
may be used to satisfy those requirements:
(a)
A permit issued to a person who owns fifty (50) percent or more of the
applicant;
(b)
A permit issued to a person who is owned fifty (50) percent or more by a person
meeting the requirements of subsection (4) of this section; or
(c)
A permit issued to a person whose combined ownership of the applicant is fifty
(50) percent or more, provided each person meets the requirements set forth in
subsection (4) of this section.
Section
4. Determination of Compliance Record. (1) An applicant shall be deemed to have
an approved compliance record if the applicant, each person who owns or
controls the applicant, each person who is owned or controlled by the
applicant, and each person who is under common ownership and control with the
applicant meet all of the criteria established in paragraphs (a) through (i) of
this subsection. Each party established in this subsection shall have:
(a)
Never committed a violation for mining without having first obtained the
required permit;
(b)
Never forfeited a bond or had a permit revoked;
(c)
Never avoided forfeiture of a bond because a surety performed reclamation work
in order to avoid forfeiture;
(d)
Never been determined to have demonstrated a pattern of violations;
(e)
Not been issued more than one (1) order for cessation and immediate compliance
for failure to complete required remedial measures in the most recent thirty-six
(36) months of operation and the order was abated as ordered in a timely manner
and was not for a violation of contemporaneous reclamation requirements under
405 KAR 16:020 or 18:020 or other applicable state or federal statute or
regulation;
(f)
Not been issued more than one (1) order for cessation and immediate compliance
for creating an imminent danger to the health and safety of the public or
causing significant, imminent environmental harm in the most recent thirty-six
(36) months of operation and the order was abated as ordered in a timely
manner;
(g)
Not committed more than one (1) violation of contemporaneous reclamation
requirements under 405 KAR 16:020 or 18:020 or other applicable state or
federal statute or regulation in the most recent thirty-six (36) months of
operation and the violation was abated in a timely manner, except the commission
may by unanimous vote exclude violations that have been terminated with no
civil penalty;
(h)
Not committed more than three (3) violations of KRS Chapter 350 or 405 KAR
Chapters 7 through 24 or other applicable state or federal statute or
regulation on any one (1) permit in any twelve (12) month period of the most
recent thirty-six (36) months of operation, except the commission may by
unanimous vote exclude the twelve (12) month period on one (1) permit during
which the largest number of violations occurred and may by unanimous vote
exclude violations that were timely abated and terminated with no civil
penalty; and
(i)
Not had civil penalties remaining unpaid more than thirty (30) days after they
were due and payable, within the most recent thirty-six (36) months of
operation.
(2)
To the extent the information is available, the commission shall take into
account the performance of the applicant and each person who owns or controls,
is owned or controlled by, or is under common ownership or control with the
applicant, in other states and on federal lands and Indian lands under criteria
similar or equivalent to those in this section.
Section
5. Compliance Review for Continued Subsidization. (1) The commission shall
review the compliance record of former applicants for extended bond
subsidization.
(2)
If the commission determines that the permittee no longer satisfies any of the
criteria in Section 4(1) of this administrative regulation, it shall advise the
cabinet that the permittee is no longer eligible for performance bond subsidization.
(3)
Upon receipt of this notice, the cabinet shall immediately order the permittee
to cease surface coal mining operations on that permit until it has obtained
alternate bond coverage.
(4)
During the period of cessation, the permittee shall maintain the permit in
compliance with the requirements of KRS Chapter 350 and 405 KAR Chapters 7
through 24.
Section
6. Permit Specific Bond. (1) For each permit obtained by transfer from a member
of the former voluntary bond pool fund, a permit-specific bond at a rate of
$2,000 per acre shall be posted.
(2)
Permit specific bonds posted pursuant to this section shall be released in
accordance with the provisions of 405 KAR 10:015, Section 2.
Section
7. Incorporation by Reference. (1) "Application for Performance Bond
Subsidization for
Permit Succession",
RGF-4, April 2014, is incorporated by reference.
(2)
This material may be inspected, copied, or obtained, subject to applicable
copyright law, at the Kentucky Department for Natural Resources, 2 Hudson
Hollow, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.
(41 Ky.R. 338; Am. 1053; eff. 12-5-2014.)
