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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


Published: 2015

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      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.)