2021-11-02_REVISION - C1981012

• Permit No: C1981012
• IBM Index Class Name: Revision
• Doc Date: 11/2/2021
• Doc Name: Adequacy Review #2
• From: DRMS
• To: New Elk Coal Company, LLC
• Type & Sequence: PR5
• Email Name: JLE
• Media Type: D
• Archive: No

New Elk Mine, PR5 Adequacy Review 2
November 2,2021
Page 7 of 11
c. DRMS Response:Revised page 10 sates reopening of the shafts will not require disturbance to
vegetation already established during the afore-mentioned reclamation process. This does not appear
possible,please explain how these facilities and associated structures will be reconstructed without
re-affecting the Phase III release area of the Apache Air Shafts and the Phase II released area of the
Golden Eagle Fan Site,or revise page 10 to remove this statement.
Rule 2.05.4—Reclamation Plan
37. The Division recently conducted the required Midterm Review(MT8)for the New Elk Mine. Part of the
review consisted of a review of the performance bond liability. The Division estimated the reclamation
liability at the site to be $5,206,046.00. The current required surety for the New Elk Mine is$4,605,014.08,
and the Division currently holds$4,647,856.08 of bond in the form of corporate sureties. The estimated
liability at the site based on the MT8 review is$601,031.92 more than the current required surety,and is
$558,189.92 more than the current bond held for the site. The Division requests that NECC review the
reclamation cost estimate that was attached to midterm review document. Please inform the Division if you
concur with the liability estimate.
a. NECC Response: We will review and bond this as part of MT8 and not PR5.
b. DRMS Response:The Division cannot approve PR5 unless the applicant will submit the required
performance bond in accordance with Rule 2.07.60). The MT8 review is complete,and DRMS had
estimated the liability of the site using that estimate,however an updated PR5 cost estimate is
enclosed. On September 30,2021 NECC responded to DRMS' MT8 cost estimate and identified
several concerns discussed below:
i. NECC Item#1:The increase in bond amount from$4,605,014.08(calculated as of
December,2018)to$5,206,046.00(calculated as of August,2021)represents an increase of
$601,031.92 or 13.1%in the estimated bond amount required.This is well above the Bureau
of Labor Statistics increase in PPI index for Construction Services of 8.09%over the same
period of time.
1. DRMS Response:Each year DRMS updates the unit costs used in our cost
estimating software CIRCES. In 2018,during the process of updating the unit
costs,DRMS found the ownership and operating costs that we were using did not
reflect accurate annual use hours for the equipment in the system. This error
resulted in lower equipment costs. Once this error was identified,DRMS phased in
the increased unit costs between 2018 and 2021. The cost increases noted by NECC
are primarily a result of this issue as well as typical changes in costs that occur each
year. In addition,the December 2018 cost estimate did not include$438,418.00 in
liability associated with the approval of technical revisions TR74 and TR75
approved in October of 2020.
ii. NECC Item#2:For this reason,we would request additional explanation of the differences
in the following task items in the calculation details:
1. Item a:Tasks 017 and 018 appear to be duplicates.
a. DRMS Response:An updated cost estimate addressing this discrepancy is
enclosed. However,the MT8 cost for Task 030 did not populate correctly
on the cost summary form and the hours estimated for the Job