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ACTION PLAN ID # 'UT-1-017-001 <br /> that DOGM's use of R.S. Means is appropriate. However, OSMRE's technical findings <br /> indicated that the reviewer also could not verify that DOGM consistently used any one <br /> acceptable construction cost index such as the R.S. Means. For instance, the inflation rates that <br /> DOGM used at the mid-term permit review bond escalation for the Dugout Canyon,Skyline, and <br /> Sufco mines were significantly lower than the corresponding rates OSMRE calculated from the <br /> R.S. Means indices over the same(or near-same)timeframe. OSMRE notes that some <br /> discrepancy may have arisen from the use of different R.S. Means values such as three year <br /> averages as set forth in Tech-007, and five year averages as set forth on page 12 of DOGM's <br /> TDN response.15 Therefore, OSMRE initiated discussions with DOGM pertaining to its <br /> practices for calculating inflation factors. OSMRE's goal is to clarify, and ensure consistent use <br /> of inflation factors, in accordance with the approved Utah program requirements. <br /> During the OSMRE-DOGM meeting in Salt Lake City, Utah on March 28, 2017, DOGM <br /> indicated the R.S. Means historical cost index value it employs is based solely on demolition <br /> costs. PSD suggested using the general cost index which includes all construction divisions <br /> rather than a demolition-based index. After discussing the merits of each value, OSMRE and <br /> DOGM agreed that the general cost index is a more appropriate number to employ in calculating <br /> reclamation cost estimate escalation factors. DOGM agreed to adopt and implement this change <br /> in its bond calculation procedures. <br /> CRITERIA FOR RESOLUTION: DOGM must revise Tech-007 to reflect actual escalation <br /> factor calculation practices (five year averages) and must consistently apply the general cost <br /> index which includes all construction divisions from the R.S. Means Book. <br /> ACTION SEQUENCE: <br /> ❑ DOGM and OSMRE will discuss use of R.S. Means values and determine which <br /> historical cost index is most appropriate for use in reclamation cost escalation factors. <br /> ❑ DOGM shall revise Tech-007 § 6(D)(1) to direct use of five year averages,rather than the <br /> three year averages currently listed, to reflect DOGM's standard calculation practices. <br /> ❑ DOGM shall submit Tech-007 revisions to DFB for review. <br /> ❑ DFB shall review the document to ensure consistency and resolution of Issue 3. <br /> ❑ DFB shall provide any comments on DOGM's Tech-007 guidance,as revised. <br /> ❑ If necessary or desired,DOGM shall further revise Tech-007. <br /> ❑ DOGM shall finalize Tech-007 and obtain the necessary internal approvals required to <br /> Finalize and implement the revised guidance document. <br /> ❑ DOGM shall subsequently draft and send a letter to coal mine operators and permittees <br /> notifying them of anticipated changes following the formal adoption of the revised Tech- <br /> 007 document. <br /> ❑ DOGM will begin implementing its revised procedures. DOGM shall then apply the <br /> general cost index,which includes all construction divisions, from R.S. Means as <br /> discussed and agreed upon during the March 2017 meeting. <br /> SCHEDULE: <br /> ❑ By March 29,2017,DOGM and OSMRE will discuss and agree upon which historical <br /> is Tech-007§6(D)(1). <br /> 8 <br />