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Jerry M. Nettleton <br />Page 17 <br />June 11, 2014 <br />5) MCM Concern: Increases in both the Engineering and M &A rates — 4.25% to 5.23% and 3.25% to <br />4.00 %. <br />a) These percentages were changed approximately two years ago. These percentages used to be a <br />straight percentage of the estimate regardless of the amount of the direct costs. The engineering <br />was 4.25% of the direct costs and the M &A was 3.25% of the direct costs. By using a set <br />percentage for these two indirect costs, regardless of the size of the estimate, meant that the <br />Division was underestimating these costs for small sites (estimates) and overestimating these <br />costs for large sites (estimates). This lead to a change, where small estimates are charged a larger <br />percentage for these items and larger estimates are charged a smaller percentage. The <br />percentages for the engineering cost now ranges from 10% for a $10,000 estimate to 2% for a <br />$100,000,000 estimate. The percentage for the M &A cost now ranges from 7.1 % to 1.91 %. <br />Some sites saw a decrease in these costs, some sites saw an increase in these costs and some sites <br />saw one of these costs increase and one decrease. In the case of the Williams Fork Mines, they <br />were in the group that saw increases in both costs. The Division believes that these percentages <br />provide a better estimate of the engineering and M &A costs at mine sites and better ensure that <br />the Division has adequate bond monies in the event of permit revocation and bond forfeiture. <br />The Bond review comment memo indicates that the Division did not include a cost for the reclamation of <br />the Williams Fork Strip Pit and the Utah Track. Thank you for pointing that out, we will include a cost <br />for these items with the forthcoming estimate. In order to complete the estimate the items discussed <br />above will need to be addressed. In the meantime, the Division will be updating the reclamation cost <br />estimate to the extent possible. <br />Comment Letters <br />The Division received comment letters in regards to TR36 from the Division of Water Resources and the <br />State Historic Preservation Officer. The Division responded to the State Historic Preservation Officer <br />with additional information to assist them with their review and the responded via e -mail with the final <br />comment. The correspondence from with these agencies is enclosed. <br />