Kentucky Regulatory Program

<RULE> DEPARTMENT OF THE INTERIOR <SUBAGY>Office of Surface Mining Reclamation and Enforcement</SUBAGY> <CFR>30 CFR Part 917</CFR> <DEPDOC>[SATS No. KY-260-FOR; Docket ID: OSM-2018-0008; S1D1S SS08011000 SX064A000 245S180110; S2D2S SS08011000 SX064A000 24XS501520]</DEPDOC> <SUBJECT>Kentucky Regulatory Program</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of Surface Mining Reclamation and Enforcement, Interior. <HD SOURCE="HED">ACTION:</HD> Final rule; approval of amendment, with one exception. <SUM> <HD SOURCE="HED">SUMMARY:</HD> We, the Office of Surface Mining Reclamation and Enforcement (OSMRE), are approving an amendment, with one exception, to the Kentucky regulatory program (Kentucky program) under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act). We are approving changes to statutory provisions that involve civil penalty fund distributions, self-bonding, and major permit revisions related to underground mining. We are not approving a provision that involves civil penalty escrow accounts. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The rule is effective September 16, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Michael Castle, Field Office Director, Lexington Field Office, Office of Surface Mining Reclamation and Enforcement, Telephone: (859) 260-3900, email: <E T="03">mcastle@osmre.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <EXTRACT> <FP SOURCE="FP-2">I. Background on the Kentucky Program</FP> <FP SOURCE="FP-2">II. Submission of the Amendment</FP> <FP SOURCE="FP-2">III. OSMRE's Findings</FP> <FP SOURCE="FP-2">IV. Summary and Disposition of Comments</FP> <FP SOURCE="FP-2">V. OSMRE's Decision</FP> <FP SOURCE="FP-2">VI. Statutory and Executive Order Reviews</FP> </EXTRACT> <HD SOURCE="HD1">I. Background on the Kentucky Program</HD> Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, State laws and regulations that govern surface coal mining and reclamation operations in accordance with the Act and consistent with the Federal regulations. <E T="03">See</E> 30 U.S.C. 1253(a)(1) and (7). Based on these criteria, the Secretary of the Interior conditionally approved the Kentucky program effective May 18, 1982. You can find background information on the Kentucky program, including the Secretary's findings, the disposition of comments, and conditions of approval in the May 18, 1982, <E T="04">Federal Register</E> (47 FR 21434). You can also find later actions concerning Kentucky's program and program amendments at 30 CFR 917.11, 917.12, 917.13, 917.15, 917.16, and 917.17. The regulatory authority in Kentucky is the Kentucky Energy and Environment Cabinet, Department of Natural Resources (herein referred to as the Cabinet). <HD SOURCE="HD1">II. Submission of the Amendment</HD> By letter dated September 19, 2018 (Administrative Record Number KY-2007-01), the Cabinet submitted an amendment to its program under SMCRA (30 U.S.C. 1201 <E T="03">et seq.</E> ), docketed as KY-260-FOR. The amendment seeks to revise the Kentucky Revised Statutes (KRS) to include statutory changes that involve civil penalty escrow accounts, civil penalty fund distributions, self-bonding, and major permit revisions related to underground mining. The General Assembly of the Commonwealth of Kentucky enacted statutory changes through House Bill 261, which was signed by the Governor on April 2, 2018, and became effective on July 14, 2018. <E T="03">See</E> 2018 Ky. Acts ch. 85. These changes are codified at KRS Chapter 350, <E T="03">Surface Coal Mining,</E> sections 350.0301, 350.064, 350.070, 350.518, and 350.990. The Cabinet was not required to promulgate administrative regulations as a result of the law. We announced receipt of the proposed amendment in the May 10, 2019, <E T="04">Federal Register</E> (84 FR 20595) (Administrative Record No. KY-2007-17). In the same document, we opened the public comment period and provided an opportunity for a public hearing or meeting on these provisions. We did not hold a public hearing or meeting because none was requested. The public comment period ended on June 10, 2019. No public comments were received. <HD SOURCE="HD1">III. OSMRE's Findings</HD> The following are the findings we made concerning the amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. We are approving the amendment as described below with the exception of changes to KRS 350.0301. Any revisions that we do not specifically discuss below concern non-substantive grammatical or editorial changes and can be found in the full text of the program amendment available at <E T="03">www.regulations.gov.</E> <E T="03">A. Civil Penalty Escrow Account, KRS 350.0301, Petition challenging determination of cabinet—Conduct of hearings—Administrative regulations—Secretary may designate deputy secretary to sign final orders.</E> Kentucky seeks to revise KRS 350.0301(5) by removing language requiring Kentucky's administrative regulations to include provisions that: (1) require that operators place civil penalty funds in escrow before a formal hearing on the amount of the assessment of the civil penalties; and (2) allow Kentucky to waive the escrow requirement for individuals who demonstrate with substantial evidence an inability to pay the proposed civil penalty assessment into escrow. <E T="03">OSMRE Finding:</E> In 2005, the Supreme Court of Kentucky decided <E T="03">Commonwealth of Kentucky Natural Resources and Environmental Protection Cabinet</E> v. <E T="03">Kentec Coal Co., Inc.,</E> 177 S.W.3d 718 (Ky. 2005), in which the Court concluded that Kentucky's prepayment requirements, codified at the time in the Kentucky Administrative Regulations at 405 KAR 7:092, were in violation of the due process and equal protection clauses of the United States Constitution and section 2 of the Kentucky Constitution, which prohibits arbitrary State action. In response to the Court's decision, Kentucky first removed notice of its prepayment requirements from two documents provided to operators, a Notice of Assessment of Civil Penalties and a Penalty Assessment Conference Officer's Report, and Kentucky added language to those documents making clear that prepayment was no longer required to request a formal administrative hearing. By letter dated March 28, 2006, Kentucky sent us notice of these revisions, which we docketed as Program Amendment No. KY-250-FOR and subsequently disapproved on September 18, 2006 (71 FR 54586). <SU>1</SU> <FTREF/> <FTNT> <SU>1</SU>  In 2017, Kentucky removed the prepayment requirement from 405 KAR 7:092, <E T="03">see</E> 43 Ky.R. 1876 (April 1, 2017), and subsequently recodified this provision to 400 KAR 1:110, effective August 4, 2017. </FTNT> In our decision of September 18, 2006 (71 FR 54586), we concluded that removing the requirement to place civil penalty funds in escrow prior to a formal hearing on the assessment renders the program less stringent than section 518(c) of SMCRA, 30 U.S.C. 1268, and less effective than the Federal regulations at 30 CFR 845.19(a), and therefore disapproved the amendment. As stated in that document, the Supreme Court of Kentucky rulings notwithstanding, section 518(c) of SMCRA and the Federal regulations require prepayment of a proposed penalty if a hearing is requested. Section 518(c) of SMCRA states that should the person charged with the penalty wish to contest the amount of the penalty or the fact of the violation, that person must forward the proposed amount of the penalty to the Secretary for placement into an escrow account pending resolution of the contest. 30 U.S.C. 1268(c). Section 518(c) further states that failure to forward the money accordingly shall result in a waiver of all legal rights to contest the violation or the amount of the penalty. Id. The Federal regulations repeat this requirement, specifying that the petition and proposed penalty amount must be submitted to the Office of Hearings and Appeals. 30 CFR 845.19(a). Federal courts of appeals have found these provisions consistent with the due process and equal protection requirements of the United States Constitution. <E T="03">See, e.g., Graham</E> vs. <E T="03">Office of Surface Mining, Reclamation and Enforcement,</E> 722 F.2d 1106 (3d Cir. 1983). Kentucky's proposed revision to KRS 350.0301 directly relates to the same revisions that we disapproved on September 18, 2006, codified at 30 CFR 917.12(f). Kentucky's further steps to remove the requirement to prepay the assessed penalty into escrow when administrative hearing is requested continues to render Kentucky's program less stringent that section 518(c) of SMCRA and less effective than the Federal regulations at 30 CFR 845.19(a), and therefore are not approved. B. <E T="03">Self-Bonding—KRS 350.064, Reclamation bond to be filed by applicant.</E> Kentucky seeks to revise KRS 350.064(2) by removing language that allows self-bonding in the State. A self-bond is a bond of the applicant and is backed only by the overall financial health of the applicant, without separate surety or specific pledges of collateral. In order to have qualified and received approval for self-bond in Kentucky, the applicant must successfully demonstrate a history of financial solvency and continuous operation and the existence of a suitable agent to receive service of process. <E T="03">OSMRE Finding:</E> Section 509(c) of SMCRA, 30 U.S.C. 1259, and its implementing regulations at 30 CFR 800.4(d), <E T="03">Regulatory Authority Responsibilities;</E> 30 CFR 800.5, <E T="03">Definitions;</E> 30 CFR 800.12, <E T="03">Form ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 32k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━