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February 1998 Hayden Gulch Mine "Phase 1 fr 3 Bond Release Application ~ Paxe 1 ~J • 1.0 REQUIREMENTS OF BOND RELEASE 1.1 INTRODUCTION H-G Coal Company (HGCC) is subnutting the following application for a Phase II/Phase III Bond Release (Bond Release Application) for the Hayden Gulch Mine, Permit No. C-80-003. The Bond Release Application presents vegetation data which indicates that reclamation activities conducted at the mine have resulted in the fulfillment of all revegetation success criteria and the establishment of vegetation which supports the approved postmining land use at the Hayden Gulch Mine. In addition, hydrologic data presented in this application indicates on-site hydrologic impacts have been minimized and off-site hydrologic impacts prevented. The Bond Release Application follows the general procedural and format requirements of Section 3433-125 of the Colorado Surface Coal Mining Reclamation Act (Act), and Rule 3.03, Release of Performance Bonds, of the Regulations of the Colorado Mined Land Reclamation Board for Coal Mining (Regulations), as outlined in the Guideline Regarding Selected Coal Mine Bond Release Issues, April 18, 1995 (Bond Release Guideline) (Colorado Division of Minerals and Geology [DMG], April 1995). As discussed in Technical Revision ('I'R) No. 63 (TR-63), the approved postmining land use at the Hayden Gulch Mine is livestock grazing and wildlife habitat, which is entirely compatible with adjoining and surrounding lands. The mine disturbance azea at the Hayden Gulch Mine addressed in this Bond Release Application are the former mine site azea and facilities area, totaling 357.3 acres, which aze located east and west of Routt County Road 53, respectively. HGCC posted a corporate surety bond of 52,300,000 with DMG to cover the calculated reclamation liability for the Hayden Gulch Mine. The DMG approved a partial Phase I Bond Release Application for the 319 acres located at the mine site east of Routt County Road 53 in a letter dated March 19, 1988. A sum of 5855,000 was released from HGCC's bond liability. As part of the August 1994 mid-term permit review, the DMG set the outstanding liability at 51,368,313. However, this amount did not reflect transfer of ownership for the railroad loadout facility previously owned and permitted by HGCC. In June 1993, DMG approved TR-61 which authorized the transfer of all reclamation liability associated with the railroad loadout and ancillary facilities from HGCC to Hayden Gulch Terminal, Inc. HGCC did not, as part of TR-61, specifically request bond release for the reclamation liability associated with the railroad loadout and ancillary facilities. The approval of TR-63 by DMG on December 5, 1996 provided for a bond reduction of $708,986 which reflected the transfer of the loadout facility. The outstanding reclamation liability following approval of TR-63 was 5659,327. On July 3, 1996, HGCC submitted a second partial Phase I Bond Release Application for that part of the Hayden Gulch Mine which is located west of Routt County Road 53. The second bond release application was for 45.1 acres which were associated with the mine support facilities azea. The DMG approved the Facilities Area Phase I Bond Release Application in a letter dated June 19, 1997. A sum of 5108,046.73 was released from HGCC's liability bond. Following the Phase I bond releases and the bond reduction associated with the loadout transfer, the outstanding bond liability for the Hayden Gulch Mine is 5551,280. With each bond reduction, HGCC chose not co seek return of the reduced liability amount from the 52,300,000 bond instrument that DMG holds. By letter of December 19, 1997 DMG authorized Aetna Casualty and Surety Company to reduce remaining liability coverage to 5 551,280. Montgomery Watson Americas (dba TenaMatnxJ • P.O. Box 774018 Steamboat Springs, Colorado 80477 •1970) 879-6160 v \IIINAi~1 bl bMRdm A/p"vum\Tm\Av t L J hwd RArenyrfr~m. ln6/-I J.