405 KAR 10:035.
Procedures, criteria and hearing requirements for cancellation of surety bonds
after notice of noncompliance issued for failure to maintain contemporaneous
reclamation.
RELATES TO: KRS
350.020, 350.060, 350.062, 350.064, 350.068, 350.151, 350.465
STATUTORY
AUTHORITY: KRS Chapter 13A, 350.020, 350.028, 350.060, 350.064, 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. (11 Ky.R. 331; Am. 577; eff. 10-9-84.)