Opinion ID: 1789963
Heading Depth: 1
Heading Rank: 1

Heading: the administrative procedures

Text: In Franklin v. Natural Resources and Environmental Protection Cabinet, 799 S.W.2d 1 (Ky.1990), we found a similar CABINET hearing procedure unconstitutional, wherein we held, this regulation which denies the due process hearing to an aggrieved party based solely on his financial inability to pay the penalties which he seeks to appeal is unconstitutional, in violation of the equal protection clauses of the United States and Kentucky Constitutions. Id. at p. 3. Following Franklin , the General Assembly then amended Chapter 350 of the Kentucky Revised Statutes to add the current version of KRS 350.0301(5), which allows for the parallel hearing procedures discussed previous. Yet, KRS 350.0301(5) still includes a requirement of prepayment of penalties for hearings contesting the amount of the penalty  but not the fact-of-violation hearings. Pursuant to the authority then established in KRS 350.0301, 350.028 and 350.465(3)(i), the CABINET promulgated 405 KAR 7:092. Section 3 of 405 KAR 7:092, sets forth the requirements for the proposed penalty assessment and the options the permittee has following the issuance of a Notice of Proposed Assessment. Section 4 recites the procedures for the informal assessment conference, a permittee may utilize to contest the assessment without having to prepay. However, this is not a formal recorded proceeding; nor is a record created from which an Appeal on record may be taken. Moreover, in this conference, the CABINET selects the conference officer to handle the conference. 405 KAR 7:091, Section 10. In particular, 405 KAR 7:092, Section 4(3) states: The assessment conference shall not be governed by the requirements for administrative hearings [405 KAR 7:091, Section 3] or by the provision of 400 KAR 1:040, [3] Section 6 outlines the procedures that must be followed by the permittee to obtain a formal hearing to challenge an assessment, and requires the prepayment of the assessment as proposed, or if an assessment conference has been held, prepayment of the penalty recommended by the conference officer. Section 7 allows permittees to challenge the Issuance of a Non-Compliance or Cessation Order in a formal hearing without a prepayment (the fact-of-violation hearing). Upon prepayment of the pending assessment under Section 6, the formal penalty hearing is de novo and on the record. Finally, Section 15 allows individuals (but not corporations), the opportunity to prove their inability to prepay the proposed assessment and to obtain a waiver from the prepayment requirements of Section 6. [4] According to the CABINET, the prepayment requirement for corporations is necessary to assist in the collection of corporate fines and penalties, while the waiver for individuals is predicated on their potential need for necessary living expenses. As a result of the proposed assessment, KENTEC filed a request for an informal Assessment Conference pursuant to 405 KAR 7:092, Section 4. An assessment conference was scheduled for April 17, 1997; however, KENTEC did not attend and the conference officer entered a report and recommendation on May 22, 1997, recommending the Secretary enter an Order upholding the assessment as proposed. The conference report gave notice that KENTEC could request a formal administrative hearing by filing a Petition accompanied by full payment of the proposed assessment. KENTEC did file a Petition for Hearing on the proposed assessment by June 19, 1997. However, in its Petition KENTEC stated it did not have sufficient funds to prepay the proposed assessment. Thus, the CABINET filed a Motion to Dismiss KENTEC's Petition for reasons the prepayment was not attached. The CABINET's Motion noted the waiver of prepayment provisions did not apply to KENTEC, since it was a corporation. Thus, the hearing officer recommended dismissal of KENTEC's timely Petition on ground of failure of prepayment to which KENTEC filed exceptions. An Order dismissing KENTEC's Petition and affirming the penalty was entered by the Secretary on July 28, 1998. KENTEC also petitioned for temporary relief from the Non-Compliance and Cessation Order on June 27, 1997, and a hearing officer  different than the one assigned to hear the fact-of-violation case  granted temporary relief from the violation. This temporary relief order abating the violation was effective until the Secretary's Order was entered on April 1, 1998, in the formal fact-of-violation case, denying KENTEC relief and upholding the issuance of the violation and the Cessation Order.