RENDERED: APRIL 1, 2022; 10:00 A.M.

NOT TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2021-CA-0022-MR

VIKING ACQUISITION GROUP, LLC APPELLANT 

v. 

APPEAL FROM PIKE CIRCUIT COURT

HONORABLE EDDY COLEMAN, JUDGE

ACTION NO. 19-CI-00993

COMMONWEALTH OF KENTUCKY, 

ENERGY AND ENVIRONMENT 

CABINET AND REBECCA W. 

GOODMAN, SECRETARY, ENERGY 

AND ENVIRONMENT CABINET APPELLEES 

OPINION

AFFIRMING

**   **  **

BEFORE: ACREE, CETRULO, AND TAYLOR, JUDGES.

TAYLOR, JUDGE: Viking Acquisition Group, LLC (Viking) appeals an Opinion 

and Order entered December 23, 2020, by the Pike Circuit Court granting 

summary judgment in favor of the Commonwealth of Kentucky, Energy and 

Environment Cabinet (Cabinet). We affirm.
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Background

In 2011, the Cabinet issued a surface coal mining and reclamation 

permit to Viking. The permit involved approximately 394 acres of land in Pike 

County, Kentucky. In order to obtain the permit, Viking was required to post 

various performance bonds. The permit expired in September of 2014. Also, 

beginning in 2014, the Cabinet issued at least ten notices of noncompliance and 

failure to abate cessation orders. Viking failed to contest the factual basis of each 

noncompliance, resulting in final orders from the Cabinet’s Secretary in each 

instance. On March 27, 2017, pursuant to 405 Kentucky Administrative 

Regulations (KAR) 10:050, the Cabinet initiated the forfeiture of the bonds on the 

permit and issued a Determination of Bond Forfeiture to Viking, forfeiting all 

bonds and citing the numerous notices of noncompliance and failure to abate 

cessation orders.1

On May 23, 2017, Viking filed a petition for review with the Cabinet 

pursuant to 400 KAR 1:110, Section 9, challenging the Cabinet’s determination. 

Therein, the sole issue raised by Viking was the Cabinet’s failure to file a petition 

for an administrative hearing to initiate a bond forfeiture action in accordance with 

1 Viking Acquisition Group, LLC (Viking), did not file a petition for an administrative hearing 

within thirty days to contest the assessment of civil penalties as provided by 405 Kentucky 

Administrative Regulations (KAR) 7:092, Section 9, recodified to 400 KAR 1:110, Section 7, 

effective Aug. 4, 2017. 
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400 KAR 1:110, Section 5. The parties filed cross-motions for summary 

disposition and the Administrative Hearing Officer recommended bond forfeiture 

and permit revocation. Viking filed exceptions to the Hearing Officer’s report; 

however, the Cabinet’s Secretary entered a final order on August 23, 2019, 

adopting the Hearing Officer’s report and recommendations without modification. 

Thereafter, on September 23, 2019, Viking filed a complaint in the Pike Circuit 

Court seeking review of the Cabinet’s final order. Cross-motions for summary 

judgment were filed by the parties. Following a hearing on the motions, the circuit 

court entered an Opinion and Order on February 23, 2020, granting summary 

judgment to the Cabinet. This appeal followed.

Standard of Review

Customarily, our review of a summary judgment is guided by 

Kentucky Rules of Civil Procedure (CR) 56.03 and Steelvest, Inc. v. Scansteel 

Service Center, Inc., 807 S.W.2d 476 (Ky. 1991). However, judicial review of an 

administrative agency’s decision is generally concerned with arbitrariness. Our 

review is provided by Kentucky Revised Statutes (KRS) 13B.160 and is guided by 

KRS 13B.150:

(2) The court shall not substitute its judgment for that of 

the agency as to the weight of the evidence on questions 

of fact. The court may affirm the final order or it may 

reverse the final order, in whole or in part, and remand 

the case for further proceedings if it finds the agency’s 

final order is:
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(a) In violation of constitutional or statutory 

provisions;

(b) In excess of the statutory authority of the agency;

(c) Without support of substantial evidence on the 

whole record;

(d) Arbitrary, capricious, or characterized by abuse of 

discretion;

(e) Based on an ex parte communication which 

substantially prejudiced the rights of any party and 

likely affected the outcome of the hearing;

(f) Prejudiced by a failure of the person conducting a 

proceeding to be disqualified pursuant to KRS 

13B.040(2); or

(g) Deficient as otherwise provided by law.

To the extent questions of law arise out of an administrative 

proceeding, the court’s review is de novo. Aubrey v. Off. of the Att’y Gen., 994 

S.W.2d 516, 519 (Ky. App. 1998). Further,

[t]he purpose of judicial review of an appeal from an 

administrative agency is to ensure that the agency did not 

act arbitrarily. Baesler v. Lexington-Fayette Urban

County Government, 237 S.W.3d 209 (Ky. App. 2007). 

If the Court concludes that the agency applied the correct 

rule of law to the facts supported by substantial evidence, 

the final order of the agency must be affirmed. Bowling

v. Natural Resources and Environmental Protection

Cabinet, 891 S.W.2d 406 (Ky. App. 1994).

Com., Energy and Env’t Cabinet v. Spurlock, 308 S.W.3d 221, 223 (Ky. App. 

2010).
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Analysis

 We begin by noting that Viking has not, at any time, made a factual 

argument regarding the Notices of Non-Compliance or the resulting final orders of 

the Cabinet’s Secretary. The only issue Viking has presented is whether the 

Cabinet followed the proper administrative procedure set out in the applicable 

regulations regarding the forfeiture of the bonds. Specifically, Viking argues the 

Cabinet improperly proceeded under 405 KAR 10:050, which does not require a 

hearing prior to forfeiture of the bonds. Viking asserts the Cabinet is required to 

conduct an administrative hearing prior to bond forfeiture pursuant to 400 KAR 

1:110, Section 5(1)(c) because this regulation is more specific regarding bond 

forfeiture.2 Like the circuit court, we disagree with this argument.

 405 KAR 10:050 is entitled “Bond Forfeiture” and states, in relevant 

part,

NECESSITY, FUNCTION, AND CONFORMITY: 

KRS Chapter 350 requires the cabinet to regulate surface 

coal mining and reclamation operations in a manner as to 

ensure that satisfactory reclamation is accomplished. 

This administrative regulation establishes the procedures 

and criteria by means of which a bond may be forfeited 

to the cabinet. This administrative regulation establishes 

that certain violations of KRS Chapter 350 and 

administrative regulations promulgated pursuant to that 

chapter may cause a bond to be forfeited. This 

administrative regulation establishes that a hearing may 

2 When two statutes involve the same subject matter, one broadly and one specifically, the 

specific statute is controlling. Destock #14, Inc. v. Logsdon, 993 S.W.2d 952, 959 (Ky. 1999). 
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be requested before forfeiture can be effected. This 

administrative regulation establishes the method to 

determine the amount of bond forfeiture.

 405 KAR 10:050 Section 2 is entitled “Procedures” and states, in 

relevant part,

(1) Except as established in subsection (2) of this section, 

if forfeiture of the bond is required by Section 3 of this 

administrative regulation, the cabinet shall:

(a) Send written notification by certified 

mail, return receipt requested, to the 

permittee, and to the surety on the bond, if 

applicable, of the cabinet’s determination to 

initiate forfeiture of the bond and the 

reasons for the forfeiture;

(b) Advise the permittee and surety, if 

applicable, of their right to challenge the 

determination pursuant to 400 KAR 1:110, 

Section 9; and

(c) If no hearing is requested within thirty 

(30) days following notification and the 

bond proceeds are not received, enter a final 

order of forfeiture and proceed in an action 

for collection on the bond.

(2) The cabinet may, as an alternative to following the 

procedures of subsection (1) of this section, initiate 

formal hearing procedures concerning forfeiture of the 

bond alone or in conjunction with the cabinet’s action for 

other appropriate remedies against the permittee pursuant 

to 400 KAR 1:110, Section 5.

(Emphasis added.)
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 405 KAR 10:050 Section 3 is entitled “Criteria for Forfeiture” and 

states, in relevant part,

(1) A bond for a permit area or increment shall be 

forfeited, if the cabinet finds that:

(a) The permittee has violated any of the 

terms or conditions of the bond and has 

failed to take corrective action;

(b) The permittee has failed to conduct the 

surface mining and reclamation operations 

in accordance with KRS Chapter 350, the 

conditions of the permit or 405 KAR 

Chapters 7 through 24 within the time 

required;

(c) The permit for the area or increment 

under bond has been revoked or the 

operation terminated, unless the permittee, 

surety, or other financial institution 

providing bond assumes liability pursuant to 

an agreement for the completion of 

reclamation; or

(d) The permittee, surety, or other financial 

institution providing bond has failed to 

comply with a compliance schedule 

approved pursuant to Section 1(2) or (3) of 

this administrative regulation.

. . . .

(2) A bond may be forfeited if the cabinet finds that:

(a) 1. The permittee has become insolvent; 

or
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2. A creditor of the permittee has 

attached or executed judgment 

against the permittee’s equipment, 

materials, or facilities, at the permit 

area; and

(b) The permittee cannot demonstrate or 

prove the ability to continue to operate in 

compliance with KRS Chapter 350, 405 

KAR Chapters 7 through 24, and the permit.

(Emphasis added.)

 The Cabinet argues the bond forfeiture was required by 405 KAR 

10:050, Section 3(1)(a) and Section 3(1)(b). Viking does not dispute any facts 

relating to that determination. The Cabinet also argues it complied with the 

requirements of 405 KAR 10:050 Section 2(1) by providing notice to Viking and 

informing Viking of its right to a hearing. Viking does not dispute that it received 

notice. However, as the Cabinet points out, 405 KAR 10:050 Section 2(2)

provides that the Cabinet “may,” in the alternative, initiate formal hearing 

procedures for bond forfeiture pursuant to 400 KAR 1:110 Section 5. In other 

words, the Cabinet argues the regulation provides a choice in how it is to proceed

and it is not required to initiate a hearing.

 We now turn to 400 KAR 1:110, which is entitled “Administrative 

hearings relating to matters brought under KRS Chapter 350 or KRS 351.310 

through 351.375[.]” The regulation states, in relevant part,
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NECESSITY, FUNCTION, AND CONFORMITY: 

KRS Chapter 350 requires the cabinet to promulgate 

rules and administrative regulations pertaining to surface 

coal mining and reclamation operations and coal 

exploration operations. KRS Chapter 351 authorizes the 

cabinet to promulgate rules and administrative 

regulations pertaining to explosives and blasting 

operations. This administrative regulation establishes 

hearing, conference, notice, penalty assessment, and 

other procedural and due process provisions for the 

permanent regulatory program under KRS Chapter 350, 

and the hearing procedures pursuant to KRS Chapter 351.

 Additionally, 400 KAR 1:110 Section 5(1)(c) states,

The cabinet shall initiate an administrative hearing and 

shall seek revocation of the permit and forfeiture of the 

bond or suspension of the permit pursuant to KRS 

Chapter 350 if:

1. The permittee, operator, or person has 

willfully failed to comply with a cessation 

order; or

2. The criteria of 405 KAR 10:050, Section 

3(1) apply.

(Emphasis added.)

 Viking argues that 400 KAR 1:110 Section 5 is the more specific 

regulation because it provides only one procedure for bond forfeiture, i.e., the 

Cabinet must initiate a hearing. We disagree. Looking to the titles of the two 

regulations, it is clear that 405 KAR 10:050 is specific to bond forfeiture and 400 

KAR 1:110 applies generally to administrative hearings and penalty assessments. 

Moreover, the “Necessity, Function, and Conformity” section of 405 KAR 10:050 
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specifically states that it “establishes the procedures and criteria by means of which 

a bond may be forfeited to the [C]abinet.” This includes specifics such as 

forfeiture by increment, abatement procedures, and agreements regarding 

compliance schedules. We agree with the Cabinet Secretary’s reasoning that, 

should Viking’s argument prevail, 405 KAR 10:050 would be rendered 

meaningless. By accepting the Cabinet’s argument, the two supposedly conflicting 

regulations are harmonized by providing the Cabinet with a choice in how to 

proceed with regard to bond forfeiture.3 We find no error in this interpretation.

 Accordingly, we do not agree with the circuit court’s reasoning that 

the two regulations are equally specific with regard to bond forfeiture and its 

finding that, “[h]ad this been an original case between two competing statutory 

provisions, the Court would be inclined to rule that the provisions are 

irreconcilable and give effect to neither[.]” December 23, 2020, Opinion and Order 

at 7 (footnote omitted). However, we do agree with the circuit court’s conclusion 

that a court “is not free to substitute its judgment as to the proper interpretation of 

the agency’s regulations as long as that interpretation is compatible and consistent 

with the statute under which it was promulgated and is not otherwise defective as 

arbitrary or capricious.” December 23, 2020, Opinion and Order at 7 (quoting 

3 By analogy, our analysis is similar to how we approach the harmonization of statutes, being 

cognizant of the purposes that the underlying statutes intended to accomplish. See Campbell 

Cnty. Libr. Bd. of Trs. v. Coleman, 475 S.W.3d 40, 46-47 (Ky. App. 2015).
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Commonwealth, Cabinet for Health Servs. v. Family Home Health Care, Inc., 98 

S.W.3d 524, 527 (Ky. App. 2003) (citation omitted)); see also KRS 13B.150(2). 

We cannot say that the Cabinet’s interpretation of the relevant regulations was 

incompatible or inconsistent with any statutory authority in KRS Chapters 350 and 

351, nor can we say that the Cabinet’s conduct was arbitrary or capricious. 

 In conclusion, we affirm the circuit court’s order granting summary 

judgment in favor of the Cabinet upholding the bond forfeiture.

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ALL CONCUR.

BRIEFS FOR APPELLANT:

Billy R. Shelton

Jordan W. Morgan

Lexington, Kentucky

BRIEF FOR APPELLEE

COMMONWEALTH OF 

KENTUCKY, ENERGY AND 

ENVIRONMENT CABINET:

Lance Huffman

Erritt Griggs

Frankfort, Kentucky

4

“If the summary judgment is sustainable on any basis, it must be affirmed.” Fischer v. Fischer, 

197 S.W.3d 98, 103 (Ky. 2006).