405 KAR 10:015. General bonding provisions

Link to law: http://www.lrc.ky.gov/kar/405/010/015.htm
Published: 2015

      405

KAR 10:015. General bonding provisions.

 

      RELATES

TO: KRS 350.020, 350.060, 350.062, 350.064, 350.093, 350.095, 350.100, 350.151,

350.465

      STATUTORY

AUTHORITY: KRS 350.060, 350.062, 350.064, 350.093, 350.095, 350.100, 350.151,

350.465, 350.515, 350.518

      NECESSITY,

FUNCTION, AND CONFORMITY: KRS Chapter 350 authorizes the cabinet to promulgate

administrative regulations to establish procedures for determining amounts for

performance bonds for surface coal mining operations. This administrative regulation

establishes criteria for the base determination of bond amounts and requires

certain periods of liability during which the bonds shall remain in effect.

This administrative regulation establishes requirements for filing and

maintaining performance bonds and provides for adjustments in bond amounts and

additional information related to minimum bonds and application of bonds to ensure

performance of the requirements of KRS Chapter 350 in the event work is performed

by the cabinet, taking into consideration such things as topography, geology,

future land use, and the difficulty of reclamation.

 

      Section

1. Bonding Requirements. (1) An applicant shall not disturb surface acreage or

extend an underground shaft, tunnel, or operation prior to receipt of approval

from the cabinet of a performance bond covering an area to be affected by

surface operations and facilities.

      (2)

After an application for a new, amended, revised, or renewed permit to conduct

surface coal mining and reclamation operations has been approved pursuant to

405 KAR Chapter 8, but before the permit is issued, the applicant shall file

with the cabinet, on a form prescribed and furnished by the cabinet, a

performance bond payable to the cabinet.

      (a)

The applicant shall file the Performance Bond, Form SME-42, for an operation on

land other than federal lands, or the Performance Bond for Surface Coal Mining

and Reclamation on Federal Lands, Form SME-42-F, for an operation on federal

land.

      (b)

The performance bond shall be conditioned upon compliance with all the

requirements of KRS Chapter 350, 405 KAR Chapters 7 through 24, and the

provisions of the reclamation plan and permit, and shall cover all surface coal

mining and reclamation operations to be conducted within the permit area or

increment thereof until all reclamation requirements of 405 KAR Chapters 7

through 24 have been met.

      (c)

The amount, duration, type, conditions, and terms of the performance bond shall

conform to the requirements of this administrative regulation.

      (3)

A permit shall not be revised or amended to include additional area unless the

liability of the current bond is extended to cover the entire permit area or

increment as revised or amended, and the liability of the supplemental bond

covers the entire permit area as revised or amended. Unless these conditions

are met with respect to the bond, the additional area shall be permitted as a

separate increment of the current permit area or pursuant to a new permit.

      (4)

A rider to the applicable performance bond, confirming coverage of the

revision, shall be submitted by the applicant if a revision to a permit does

not change the acreage of the permit area or increment but:

      (a)

Adds a coal washer, a crush and load facility, a refuse pile, or a coal mine

waste impoundment to the existing permit; or

      (b)

Alters the boundary of a permit area or increment.

 

      Section

2. Terms and Conditions of Performance Bond. (1) The performance bond shall be

in an amount determined by the cabinet as established in Sections 6, 7, and 8

of this administrative regulation.

      (2)

The performance bond shall be payable to the cabinet.

      (3)

The performance bond shall be conditioned upon faithful performance of all of

the requirements of KRS Chapter 350, 405 KAR Chapters 7 through 24, and the

conditions of the permit and shall cover the entire permit area or the

incremental area as the cabinet has approved pursuant to Section 4(2) of this

administrative regulation.

      (4)

The duration of the bond shall be for a time period established in Section 9 of

this administrative regulation.

      (5)

Surety bonds shall be subject to the following conditions:

      (a)

The cabinet shall not accept the bond of a surety company unless the bond shall

not be cancelable by the surety at any time for any reason.

      1.

Surety bond coverage for permitted lands not disturbed shall be cancelled only

with the written approval of the cabinet, provided the surety gives written

notice to both the permittee and the cabinet of the intent to cancel prior to

the proposed cancellation.

      a.

A cancellation notice shall be by certified mail.

      b.

Cancellation shall not be effective for lands subject to bond coverage that are

affected after receipt of notice, but prior to approval by the cabinet.

      c.

The cabinet shall approve a cancellation only if a replacement bond has been

filed by the permittee, or if the permit area has been reduced by revision to

the extent that the remaining bond amount, after cancellation, is sufficient to

cover all the costs attributable to the completion of reclamation operations on

the reduced permit area in accordance with Section 10 of this administrative

regulation.

      2.

The cabinet shall advise the surety, within thirty (30) days after receipt of a

notice to cancel bond, if the bond may be cancelled on an undisturbed area.

      (b)

The bond shall provide that the surety and the permittee shall be jointly and

severally liable.

      (c)1.

The surety shall give prompt notice to the permittee and the cabinet of a

notice received or action filed alleging the insolvency or bankruptcy of the

surety, or alleging violations of regulatory requirements that could result in

suspension or revocation of the surety's license to do business.

      2.

In the event the surety becomes unable to fulfill its obligations pursuant to

the bond, the surety shall promptly provide written notice to the permittee and

the cabinet.

      3.

Upon the incapacity of a surety by reason of bankruptcy, insolvency, or

suspension or revocation of its license or certificate of authority, the

permittee shall be deemed to be without proper bond coverage and shall promptly

notify the cabinet.

      a.

Nothing in this paragraph shall relieve the permittee of responsibility

pursuant to the permit or the surety of liability on the permittee’s bond.

      b.

The cabinet shall issue a notice to the permittee specifying a reasonable

period to replace bond coverage, not to exceed ninety (90) days.

      c.

If an adequate bond is not posted by the end of the period allowed, the

permittee shall cease coal extraction and coal processing operations and shall

comply with the provisions of 405 KAR 16:010, Section 6, or 405 KAR 18:010,

Section 4, and shall immediately begin to conduct reclamation operations in

accordance with the reclamation plan.

      d.

Coal extraction and coal processing operations shall not resume until the cabinet

has determined that an acceptable bond has been posted.

      e.

If an acceptable bond has not been posted by the end of the period allowed, the

cabinet shall suspend the permit until acceptable bond is posted.

      (d)

A surety bond shall be executed by the operator and a corporate surety licensed

to do business in the Commonwealth of Kentucky.

      (6)

Collateral bonds may include cash deposits with the cabinet, certificates of

deposit, or letters of credit. Collateral bonds, except for letters of credit,

shall be subject to the following conditions:

      (a)

The cabinet or its authorized agent shall obtain possession of and keep in

custody all collateral deposited by the applicant, until authorized for release

or replacement as established in 405 KAR Chapter 10.

      (b)

The cabinet shall require that certificates of deposit be assigned to the

cabinet or its authorized agent in writing, through the submittal of Escrow

Agreement Form SME-64, and the assignment evidenced on the books of the bank

issuing such certificates.

      (c)

The cabinet shall not accept an individual certificate of deposit unless it is

issued by a FDIC or FSLIC insured financial institution, and the cabinet shall

not in any circumstance accept a denomination in excess of the maximum

insurable amount as determined by FDIC and FSLIC.

      (d)

The cabinet shall require the issuer of certificates of deposit to waive all

rights of setoff or liens that it has or might have against those certificates.

      (e)

Persons with an interest in collateral posted as a bond, and who desire

notification of actions pursuant to the bond, shall request the notification in

writing to the cabinet upon an offering of collateral.

      (f)

The cabinet shall require the applicant to deposit sufficient amounts of

certificates of deposit, so as to assure that the cabinet will be able to

liquidate those certificates prior to maturity, upon forfeiture, for the amount

of the bond required by this chapter.

      (7)

A letter of credit shall be subject to the following conditions:

      (a)1.

The letter shall only be issued by a bank organized or authorized to do

business in the United States.

      2.

A letter of credit issued by a non-Kentucky lending institution shall be

confirmed by an approved Kentucky lending institution.

      (b)

A letter of credit shall be irrevocable.

      (c)

The letter shall be payable to the cabinet upon demand and receipt from the

cabinet of a notice of forfeiture issued in accordance with 405 KAR 10:050, or

in the event the bank wishes to terminate the letter on its expiration date,

the cabinet may draw upon demand. The Irrevocable Standby Letter of Credit,

Form SME-72, and the Confirmation of Irrevocable Letter of Standby Credit, form

SME-72-A, shall be submitted to the cabinet, as necessary.

      (d)1.

The issuer shall give prompt notice to the permittee and the cabinet of notice

received or action filed alleging the insolvency or bankruptcy of the issuer,

or alleging violations of regulatory requirements that could result in

suspension or revocation of the issuer's charter or license to do business.

      2.

In the event the issuer becomes unable to fulfill its obligations pursuant to

the letter of credit, notice shall be given immediately to the permittee and

the cabinet.

      3.

Upon the incapacity of an issuer by reason of bankruptcy, insolvency, or

suspension or revocation of its charter or license, the permittee shall be

deemed to be without proper performance bond coverage and shall promptly notify

the cabinet.

      a.

Nothing in this paragraph shall relieve the permittee of responsibility

pursuant to the permit or the issuer of liability on the letter of credit.

      b.

The cabinet shall issue a notice to the permittee specifying a reasonable

period to replace bond coverage, not to exceed ninety (90) days.

      c.

If an adequate bond is not posted by the end of the period allowed, the

permittee shall cease coal extraction and coal processing operations and shall

comply with the provisions of 405 KAR 16:010, Section 6, or 405 KAR 18:010,

Section 4, and shall immediately begin to conduct reclamation operations in

accordance with the reclamation plan.

      d.

Coal extraction and coal processing operations shall not resume until the

cabinet has determined that an acceptable bond has been posted.

e.

If an acceptable bond has not been posted by the end of the period allowed, the

cabinet shall suspend the permit until acceptable bond is posted.

      (8)

If a permittee chooses to combine two (2) or more bonds for one (1) permit area

or increment, the bonds may be accompanied by a schedule, acceptable to the

cabinet and agreed to by all parties, which sets forth the agreed distribution

of bond amounts to be released or reduced pursuant to 405 KAR 10:040 and

Section 10 of this administrative regulation, respectively. If no schedule is

submitted, the cabinet may release equal percentages of each bond.

      (9)

Permit specific bonds posted by members of the Voluntary Bond Pool on existing

permits prior to the establishment of the Kentucky Reclamation Guaranty Fund

shall be released in their entirety upon successfully achieving reclamation

Phase I bond release in accordance with 405 KAR 10:040, Section 2(4)(a). Permit

specific bonds posted by members of the Voluntary Bond Pool on new permits

after the establishment of the Kentucky Reclamation Guaranty Fund shall be

released in equal percentages at each reclamation phase with the Kentucky

Reclamation Guaranty Bond.

 

      Section

3. Types of Performance Bond. (1) The cabinet shall approve performance bonds

of only those types established in this section.

      (2)

The performance bond shall be a:

      (a)

Surety bond;

      (b)

Collateral bond;

      (c)

Bond filed pursuant to the provisions of the Kentucky Reclamation Guaranty

Fund, KRS 350.518;

      (d)

Bond filed by the Voluntary Bond Pool; or

      (e)

Combination of the bond types listed in paragraphs (a) through (d) of this subsection.

      (3)

Bonds filed by the Voluntary Bond Pool prior to its repeal in 2013 Ky. Acts ch.

78, Section 12, shall be deemed valid and convey the same legal right as bonds

issued by the KRGF. The amount, duration, conditions, and terms of bonds issued

by the Voluntary Bond Pool shall be deemed in compliance with the requirements

of this administrative regulation.

 

      Section

4. Bonding Methods. The method of performance bonding for a permit area shall

be selected by the applicant and approved by the cabinet prior to the issuance

of a permit, and shall consist of one (1) of the following methods:

      (1)

Method "S" - single area bonding. A single area bond shall be a bond

that covers the entire permit area as a single undivided area, for which the

applicant shall file the entire bond amount required by the cabinet prior to

issuance of the permit.

      (a)

Liability pursuant to the bond shall extend to every part of the permit area at

all times.

      (b)

Except as provided in Section 9(2) of this administrative regulation regarding

extended bond liability, there shall not be a release of all or part of the

bond amount for completion of a particular phase of reclamation on a part of

the permit area pursuant to 405 KAR 10:040 until that phase of reclamation has

been successfully completed on the entire permit area.

      (2)

Method "I" - incremental bonding. Incremental bonding shall be a

method of bonding in which the permit area shall be divided into individual

increments, each of which is bonded separately and independently, and for which

bond shall be filed as operations proceed through the permit area.

      (a)

The permit area shall be divided into distinct increments subject to approval

by the cabinet.

      1.

Each increment shall be of sufficient size and configuration to provide for

efficient reclamation operations should reclamation operations by the cabinet

become necessary.

      2.

If the approved postmining land use is of such nature that successful

implementation of the postmining land use capability depends upon an area being

integrally reclaimed, then that area shall be contained within a single

increment.

      3.

These increments shall be clearly identified on maps submitted in the permit

application pursuant to 405 KAR Chapter 8, and the applicant shall describe the

approximate time schedule for beginning operations in each increment.

      (b)

Prior to issuance of a permit, the applicant shall file with the cabinet the

full bond amount required by the cabinet for the first increment or increments

of the permit area to be disturbed, which shall be not less than the minimum

bond required for the permit area required pursuant to Section 7 of this

administrative regulation.

      (c)

The permittee shall not engage in surface coal mining and reclamation

operations on an increment of the permit area unless the full bond amount

required by the cabinet has been filed with the appropriate regional office of

the department for that increment, the cabinet has verified the validity of the

bond, and written authorization to conduct surface coal mining and reclamation

operations on that increment is issued by the administrator of the regional

office. Credit shall not be given for reclamation on other increments.

      (d)

The boundaries of each increment shall be physically marked at the site in a

manner approved by the cabinet pursuant to 405 KAR 16:030.

      (e)

The bond amount for an increment shall be released or forfeited independently

of another increment of the permit area, and liability pursuant to the

performance bond shall extend only to the increment expressly covered by the

bond. A single bond amount may be filed to cover more than one (1) increment,

in which case the increments covered shall be treated as a single increment.

      (f)

Except as provided in Section 9(2) of this administrative regulation regarding

extended bond liability, there shall not be a release of bond for completion of

a phase of reclamation on part of an increment until that phase of reclamation

has been successfully completed on the entire increment.

      (g)

If the bond for an increment is completely released pursuant to 405 KAR 10:040,

the increment shall be deleted from the permit area.

 

      Section

5. Substitution of Bonds. (1) The cabinet may allow permittees to substitute

existing surety or collateral bonds for equivalent surety or collateral bonds,

in which case the liability that has accrued against the permittee on the

permit area or increment is transferred to such substitute bonds.

      (2)

The cabinet shall not release existing performance bonds until the permittee

has submitted and the cabinet has approved acceptable substitute performance

bonds. A substitution of performance bonds pursuant to this section shall not

constitute a release of bond pursuant to 405 KAR 10:040.

      (3)

The cabinet may refuse to allow substitution of bonds if an action for

revocation or suspension of the permit covered by the bond is pending or if

there is a pending action for forfeiture of the bond.

 

      Section

6. Determination of Bond Amounts. (1) In determining the bond amount, the

cabinet shall estimate the cost to the cabinet if the cabinet had to perform

the reclamation, restoration, and abatement work required of a person who

conducts surface coal mining and reclamation operations pursuant to KRS Chapter

350, 405 KAR Chapters 7 through 24, and the permit, except as provided in subsection

(4) of this section. This amount shall be based on:

      (a)

The estimated costs submitted by the permittee in accordance with 405 KAR

8:030, Section 24(4), and 405 KAR 8:040, Section 24(4);

      (b)

The additional estimated costs to the cabinet that may arise from applicable

public contracting requirements or the need to bring personnel and equipment to

the permit area after its abandonment by the permittee to perform reclamation,

restoration, and abatement work;

      (c)

All additional estimated costs necessary, expedient, and incident to the

satisfactory completion of the requirements identified in this section;

      (d)

An additional amount based on factors of cost changes during the previous five

(5) years for the types of activities associated with the reclamation to be

performed; and

      (e)

Other cost information required or available to the cabinet.

      (2)

If the reclamation cost calculated submitted in a permit application is higher

than the minimum bond or bond calculated by the cabinet, the higher calculation

shall be used in any issued permit.

      (3)

The cabinet shall review the bonding amounts identified in Sections 7 and 8 of

this administrative regulation at a minimum of every two (2) years to determine

if the amounts are adequate due to inflation and increases in reclamation

costs.

      (4)

Full cost bonding participants shall provide the cabinet a cost estimate that

reflects the costs of reclamation to the cabinet in accordance with the

requirements of 405 KAR 10:080, Section 3.

 

      Section

7. Minimum Bond Amount. The minimum amount of the bond for surface coal mining

and reclamation operations at the time the permit is issued or amended shall

be:

      (1)

$75,000 for the entire surface area under one (1) permit;

      (2)

$75,000 per increment for incrementally bonded permits, subject to Section 4(2)

of this administrative regulation;

      (3)

$50,000 for a permit or increment operating on previously mined areas, as

defined in of 405 KAR 8:001, Section 1(86), to be evaluated by the cabinet; or

      (4)

$10,000 for underground mines that have only underground operations.

 

      Section

8. Bonding Rate of Additional Areas. Areas of a surface coal mine and

reclamation operation shall be bonded at the following rates for a permit

issued by the Division of Mine Permits:

      (1)

Coal haul roads, other mine access roads, and mine management areas shall be

bonded at $2,500 per acre and each fraction thereof.

      (2)

Refuse disposal areas shall be bonded at a minimum rate of $7,500 per acre and

each fraction thereof.

      (3)(a)

An embankment sediment control pond shall be bonded at a rate of $10,000 per

acre and each fraction thereof, with each pond being measured separately, if

the pond is located off-bench and located downstream and outside the proposed

mining or spoil storage area.

      (b)

This rate may be applied to partial embankment structures as necessary to meet

the requirements of Section 6(1) of this administrative regulation.

      (4)

Coal preparation plants shall be bonded at the base acreage rate, in accordance

with subsection (6) of this section, in addition to the costs associated with

demolition and disposal costs relating to concrete, masonry, steel, timber, and

other materials associated with surface coal mining and reclamation operations.

      (5)

Operations on previously mined areas, as defined in 405 KAR 8:001, Section

1(86), shall be bonded at rate of $2,000 per acre and each fraction thereof.

      (6)

All areas of surface coal mining and reclamation operations not otherwise

addressed in subsections (1) through (5) of this section shall be bonded at the

rate of $3,500 per acre and each fraction thereof.

      (7)(a)

For permits that have been identified as a producer of long-term treatment

drainage, the cabinet shall calculate an additional bond amount based on the

estimated annual treatment cost, provided by the permittee and verified by the

cabinet, multiplied by twenty (20) years.

      (b)

The cost estimate shall be subject to verification and acceptance by the

cabinet. The department shall use its own estimate for annual treatment costs

if the department cannot verify the accuracy of the permittee’s estimate.

      (c)

In lieu of this calculation, the permittee may submit a remediation plan to be

approved by the cabinet for the areas deemed to be producing substandard

drainage.

      1.

The remediation plan shall demonstrate that substandard discharge shall be

permanently abated by land reclamation techniques prior to phase II bond

release.

      2.

If the department rejects the plan, the permittee shall submit the additional

acid mine drainage bond previously established in this section.

 

      Section

9. Period of Liability. (1) Liability pursuant to performance bond applicable

to an entire permit area or increment thereof shall continue until all

reclamation, restoration, and abatement work required of persons who conduct

surface coal mining and reclamation operations pursuant to requirements of KRS

Chapter 350, 405 KAR Chapters 7 through 24, and the provisions of the permit

have been completed, and the permit or increment terminated by release of the

permittee from further liability in accordance with 405 KAR 10:040.

      (2)

In addition to the period necessary to achieve compliance with all requirements

of KRS Chapter 350, 405 KAR Chapters 7 through 24, and the permit, including

the standards for the success of revegetation as required by 405 KAR 16:200 and

405 KAR 18:200, the period of liability pursuant to a performance bond shall

continue for a period of five (5) years beginning with the last year of

augmented seeding, fertilizing, irrigation, or other work.

      (a)

The period of liability shall begin again upon augmented seeding, fertilizing,

irrigation, or other work required or conducted on the site prior to bond

release.

      (b)

Isolated and clearly defined portions of a bonded area requiring extended

liability because of augmentation may be separated from the original area and

bonded separately upon approval by the cabinet.

      (c)

These areas shall be limited in extent, and not constitute a scattered,

intermittent, or checkerboard pattern of failure.

      (d)

Access to the separated areas for remedial work may be included in the area

pursuant to extended liability if necessary.

      (3)

If the cabinet approves a long-term intensive agricultural postmining land use

in accordance with 405 KAR 16:210, augmented seeding, fertilization,

irrigation, or other husbandry practices normally associated with the approved

postmining land use shall not require restarting the five (5) year period of

liability.

      (4)

The bond liability of the permittee shall include only those actions that the

permittee is required to take pursuant to the permit, including completion of

the reclamation plan in a manner that the land will be capable of supporting a

postmining land use approved pursuant to 405 KAR 16:210. Actions of third

parties beyond the control and influence of the permittee and for which the

permittee is not responsible pursuant to the permit shall not be covered by the

bond.

 

      Section

10. Adjustment of Amount. (1) The amount of the performance bond liability

applicable to a permit or increment shall be adjusted by the cabinet if the:

      (a)

Acreage in the permit area or increment is either increased or decreased; or

      (b)

Cabinet determines that the cost of future reclamation, restoration, or

abatement work has changed. If it is determined that an adjustment pursuant to

this paragraph is necessary, the cabinet shall:

      1.

Notify the permittee, the surety, and any person with a property interest in

collateral who has previously requested such a notification in writing; and

      2.

Provide the permittee an opportunity for an informal conference on the

adjustment. The requirements of 405 KAR 7:091 and 7:092 shall not apply to the

conduct of the conference.

      (2)

The amount of the performance bond liability applicable to a permit or

increment may be adjusted by the cabinet upon application by the permittee

under 405 KAR 8:010, Section 20, to delete acreage from the permit area or

increment thereof if the acreage has not been affected by the surface coal

mining and reclamation operation. The provisions of 405 KAR 10:040, Section

2(3), shall apply. A reduction due to such a deletion of acreage shall not

constitute a bond release and shall not be subject to the procedures of 405 KAR

10:040, Section 1.

      (3)

The cabinet may grant reduction of the required performance bond amount if the

permittee's method of operation or other circumstances will reduce the maximum

estimated cost to the cabinet to complete the reclamation responsibilities and

therefore warrant a reduction of the bond amount. The request shall not be considered

as a request for partial bond release subject to the procedures of 405 KAR

10:040, Section 1.

      (4)

The cabinet shall refuse to approve a reduction of the performance bond

liability amount if an action for revocation or suspension of the permit covered

by the bond is pending, if there is a pending action for forfeiture of the

bond, or if the permittee is currently in violation of 405 KAR Chapters 7

through 24 on that permit or increment.

 

      Section

11. Supplemental Assurance. (1) If alternative distance limits or additional

pits are approved pursuant to 405 KAR 16:020, Section 2, the applicant shall

submit to the cabinet supplemental assurance in the amount established in this

section. This supplemental assurance shall be for the purpose of assuring the

reclamation of the additional unreclaimed disturbed area and shall be in addition

to the performance bond required pursuant to 405 KAR Chapter 10. The applicant

shall submit supplemental assurance on the cabinet form, Supplemental

Assurance, SME-42 (SA). This form shall be accompanied by the Escrow Agreement

form (for use with Supplemental Assurance form only), SME-64 (SA).

      (a)

The supplemental assurance shall not be subject to the bond release

requirements of 405 KAR 10:040, but shall be returned in accordance with the

requirements of this section.

      (b)

The requirements of Sections 2, 3, and 5 of this administrative regulation and

405 KAR 10:035 and 10:050 shall apply to supplemental assurance.

      (2)

Single seam contour mining. For single seam contour operations subject to 405

KAR 16:020, Section 2(3), the amount required shall be $150,000 per 1,500 feet,

or any portion thereof, of additional distance approved for the first pit

pursuant to 405 KAR 16:020, Section 2(3). If an additional pit or pits are approved,

the amount shall be $150,000 per 1,500 feet, or any portion thereof, including

the first 1,500 feet of each additional pit.

      (3)

Multiple seam contour mining. For multiple seam contour mining operations

subject to of 405 KAR 16:020, Section 2(4), the amount required shall be

$150,000 per 1,500 feet, or any portion thereof, of additional distance

approved for the first multiple seam operation pursuant to of 405 KAR 16:020,

Section 2(4). If additional multiple seam operations are approved, the amount shall

be $150,000 per 1,500 feet, or any portion thereof, including the first 1,500

feet of each additional multiple seam operation.

      (4)

Mountaintop removal. If a mountaintop removal operation begins by mining a

contour cut around all or a portion of the mountaintop, that contour portion

shall require the same supplemental assurance established in subsection (2) of

this section.

      (5)

Area mining. The amount required shall be $150,000 for any four (4) spoil

ridges, or any portion thereof, of additional distance approved for the first

pit pursuant to 405 KAR 16:020, Section 2(1). If an additional pit or pits are

approved, the amount shall be $150,000 for any four (4) spoil ridges, or any

portion thereof, including the first four (4) spoil ridges of each additional

pit.

      (6)

Return of supplemental assurance. Supplemental assurance shall be returned to

the person that submitted it upon:

      (a)

Application to the cabinet for the return; and

      (b)

Inspection and written documentation (including photographs) by the cabinet

verifying that the area for which the supplemental assurance was submitted has

been backfilled and graded (or in the case of mountaintop removal, the

associated highwall has been eliminated by mining operations).

 

      Section

12. Incorporation by Reference. (1) The following material is incorporated by

reference:

      (a)

"Performance Bond, Form SME-42", June 2013;

      (b)

"Irrevocable Standby Letter of Credit, Form SME-72", July 1994;

      (c)

"Confirmation of Irrevocable Standby Letter of Credit, Form

SME-72-A", July 1994;

      (d)

"Supplemental Assurance, SME-42 (SA)", July 1994;

      (e)

"Escrow Agreement (for use with Supplemental Assurance form only), SME-64

(SA)", July 1994;

      (f)

"Escrow Agreement, Form SME-64", October 2008;

      (g)

"Remining Issues and Procedures, Reclamation Advisory Memorandum No.

154", May 2012; and

      (h)

"Performance Bond for Surface Coal Mining and Reclamation on Federal

Lands, Form SME-42-F", June 2013.

      (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.

(38 Ky.R. 2004; 39 Ky.R. 467; eff. 9-6-2012; 40 Ky.R. 431; 1061; eff.

11-7-2013.)
Read Entire Law on www.lrc.ky.gov