405 KAR 10:020. Amount and duration of performance bond.
RELATES TO: KRS 350.020, 350.060, 350.064, 350.093, 350.095, 350.110, 350.465
STATUTORY AUTHORITY: KRS Chapter 13A, 350.020, 350.028, 350.060, 350.064, 350.465
NECESSITY, FUNCTION, AND CONFORMITY: KRS Chapter 350 in pertinent part requires the cabinet to adopt rules and administrative regulations governing the amount and duration of performance bonds for surface coal mining and reclamation operations. This administrative regulation specifies criteria upon which to base determination of bond amounts and requires certain periods of liability during which the bonds must remain in effect. This administrative regulation provides for adjustments in bond amounts.
Section 1. Determination of Bond Amount. The standard applied by the cabinet in determining the amount of performance bond shall be the estimated cost to the cabinet if it had to perform the reclamation, restoration and abatement work required of a person who conducts surface coal mining and reclamation operations under KRS Chapter 350, 405 KAR Chapters 7 through 24 and the permit. This amount shall be based on, but not be limited to:
(1) 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);
(2) The additional estimated costs to the cabinet which 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;
(3) All additional estimated costs necessary, expedient, and incident to the satisfactory completion of the requirements identified in this section;
(4) 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
(5) Such other cost information as may be required by or available to the cabinet.
Section 2. 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 $10,000 for the entire area under one (1) permit.
Section 3. Period of Liability. (1) Liability under performance bond(s) 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 under 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 any 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 under performance bond shall continue for a period of five (5) years beginning with the last year of augmented seeding, fertilizing, irrigation or other work. The period of liability shall begin again whenever augmented seeding, fertilizing, irrigation or other work is required or conducted on the site prior to bond release. 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. Such areas shall be limited in extent, and not constitute a scattered, intermittent, or checkerboard pattern of failure. Access to the separated areas for remedial work may be included in the area under extended liability if deemed necessary by the cabinet.
(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 which the permittee is required to take under the permit, including completion of the reclamation plan in such a manner that the land will be capable of supporting a postmining land use approved under 405 KAR 16:210. Actions of third parties which are beyond the control and influence of the permittee and for which the permittee is not responsible under the permit shall not be covered by the bond.
Section 4. Adjustment of Amount. (1) The amount of the performance bond liability applicable to a permit or increment shall be adjusted by the cabinet:
(a) When the acreage in the permit area or increment is either increased or decreased; or
(b) When the cabinet determines that the cost of future reclamation, restoration or abatement work has changed. When it is determined that an adjustment under 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 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 405 KAR 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 where such 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. However, a reduction due to such 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 any 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 on that permit. (8 Ky.R. 1417; eff. 1-6-83; Am. 15 Ky.R. 441; eff. 12-13-88.)