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At the beginning of April, Kentucky governor signed a bill that amends portions of chapters of the Kentucky Revised Statutes (KRS) that relate to mining. The 40-page bill introduces numerous new provisions with regards to different types of mining operations and procedures in the state.

Among these are also a handful of requirements related to applicants and holders of surface coal mining and reclamation permits. These include a change to requirements related to hearings related to civil penalties, a different bonding requirement for such licensees, and a requirement regarding extensions to an area covered by a permit.

For a brief overview of the changes that apply to surface coal mining and reclamation permit applicants, see below!

Kentucky House Bill 261

House Bill 261 introduces a somewhat lengthy list of changes to KRS Chapters 350, 351, and 352 (see here for a summary of all changes). A number of these changes also relate to surface coal mining and reclamation permits in the state. In short, the amendments in the bill that concern these permits include:

The removal of the requirement for civil penalty assessments to be placed in an escrow account prior to formal hearings related to the amount of such assessment
The removal of the option for such permit holders to submit their own reclamation bonds without separate sureties in lieu of the performance bond required under existing law
With the exception of incidental boundary revisions, extensions of the area covered by a permit can only be made through a separate application or an amendment to the permit
Mining for limestone, dolomite, sand, gravel, clay, fluorspar, or other vein minerals cannot be conducted without a permit unless such mining is for personal, noncommercial use and complies with the requirements delineated in the newly created section KRS 350.240 to 350.280

The above are the most important amendments made by the bill to the provisions that concern surface coal mining and reclamation permit applicants and holders. If you are new to surety bonds, see the next section for a brief explanation of how bonds function and what a reclamation performance bond is.

Surety Bonds for Surface Coal Mining and Reclamation

Surety bonds are a form of financial guarantee agreements often required by the state from various businesses as a pre-licensing requirement. These agreements serve the purpose of guaranteeing that licensed and bonded individuals and businesses will comply with the legal provisions for their profession. They further serve as a form of protection to the state and/or the public in cases in which a bonded party violates legal provisions, causing damages or losses.

For example, the Surface Mining Control and Reclamation Act (SMCRA) requires that to obtain a coal mining permit, applicants must furnish a so-called reclamation performance bond. When a surety company issues such a bond for a mining company, it basically guarantees that the latter will comply with the reclamation plan approved in its permit.

If the permit holder fails to reclaim the site as required by their permit, the bond serves as a guarantee that the state will have sufficient funds available to reclaim the site. These funds are covered by the surety company which backs the bond financially. In certain cases, instead of extending funds for the reclamation to be completed, a surety may be allowed to conduct the reclamation instead.

Yet, in the end, if a surety covers a bond claim by extending funds, the bonded mining company must reimburse the surety in full. In other words, the surety only serves as a guarantee but the final liability is carried by the mining company itself.

The change to the surety bond requirement in Kentucky may be a precaution on behalf of lawmakers to make sure that bonds posted by permit applicants are actually capable of serving the purpose they are intended for.

What do you think about the Bill and its provisions? Will these changes affect mining companies in any significant way? Let us know what you think in the comments! Open +

Home>Power>Kentucky amends law allowing surface coal mining and reclamation permit applications to submit their own bonds
Kentucky amends law allowing surface coal mining and reclamation permit applications to submit their own bonds
June 6, 2018

By Vic Lance, Founder and President of Lance Surety Bond Associates

For a brief overview of the changes that apply to surface coal mining and reclamation permit applicants, see below!

Kentucky House Bill 261
House Bill 261 introduces a somewhat lengthy list of changes to KRS Chapters 350, 351, and 352 (see here for a summary of all changes). A number of these changes also relate to surface coal mining and reclamation permits in the state. In short, the amendments in the bill that concern these permits include:

The removal of the requirement for civil penalty assessments to be placed in an escrow account prior to formal hearings related to the amount of such assessment
The removal of the option for such permit holders to submit their own reclamation bonds without separate sureties in lieu of the performance bond required under existing law
With the exception of incidental boundary revisions, extensions of the area covered by a permit can only be made through a separate application or an amendment to the permit
Mining for limestone, dolomite, sand, gravel, clay, fluorspar, or other vein minerals cannot be conducted without a permit unless such mining is for personal, noncommercial use and complies with the requirements delineated in the newly created section KRS 350.240 to 350.280
The above are the most important amendments made by the bill to the provisions that concern surface coal mining and reclamation permit applicants and holders. If you are new to surety bonds, see the next section for a brief explanation of how bonds function and what a reclamation performance bond is.

Surety Bonds for Surface Coal Mining and Reclamation
Surety bonds are a form of financial guarantee agreements often required by the state from various businesses as a pre-licensing requirement. These agreements serve the purpose of guaranteeing that licensed and bonded individuals and businesses will comply with the legal provisions for their profession. They further serve as a form of protection to the state and/or the public in cases in which a bonded party violates legal provisions, causing damages or losses.

What do you think about the Bill and its provisions? Will these changes affect mining companies in any significant way? Let us know what you think in the comments! Vic Lance is the founder and president of Lance Surety Bond Associates.

http://www.pennenergy.com/articles/pennenergy/2018/06/coal-news-kentucky-amends-law-allowing-surface-coal-mining-and-reclamation-permit-applications-to-submit-their-own-bonds.html