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Snell &Wilmer <br />L.L.P <br />with National Indemnity Company of Omaha. Under the agreement, National Indemnity is <br />responsible for claims made under the Bond; National Indemnity is certified by the U.S. <br />Department of Treasury. Frontier tendered copies of that agreement and the rider to the DMG <br />and the Attorney General at the March 9th meeting. <br />As applied to Powderhom, Rule 3 of the DMG regulations concerning Performance <br />Bonds only requires that the Frontier Bond remain effective. The status of the surety bond is <br />significant under very limited conditions, and none of those circumstances applies here. In fact, <br />the regulation requires that the Frontier Bond remain effective even in the event payments aze <br />not made by the principal. Thus, the status of Frontier's listing by the U.S. Department of <br />Treasury is irrelevant. The Bond is effective and remains in full force and effect. <br />II. <br />FRONTIER'S LOSS OF ITS TREASURYLISTING DDES NOT <br />CONSTITUTE A VALID BASIS FOR ISSUANCE OFANNOV TO <br />POWDERHORN <br />The NOV and the letter from Assistant Attomey General Clark, dated December 15, <br />2000 (the "Clazk letter"), assert that Powderhom must replace the Bond because Frontier has <br />been delisted by the U.S. Department of Treasury. In essence, the Clark letter asserts that a <br />surety with a valid Treasury listing is required for any bond covering federal lands and, in the <br />alternative, for a bond covering any permit issued by DMG. There is no basis for this assertion. <br />Colorado cannot rely on Frontier's delisting as a basis for issuance of the Powderhom NOV. <br />A. A Bond Governing Coal Minin¢ on Federal Lands in Colorado is not Subiect <br />to Federal Bonding Requirements <br />The Bond was issued in favor of both DMG and OSM (for the federal lands). The Clark <br />letter asserts that, because the Bond was issued in favor of an agency of the United States, the <br />Bond is subject to the requirements of 31 U.S.C. §§9304-9308 and 31 C.F.R. Part 223, which <br />require that all federal bonds be issued by a company holding a valid and current certificate of <br />authority from the U. S. Deparhnent of Treasury. Since Frontier has lost its Treasury listing, <br />Colorado asserts that the Bond is unacceptable as a federal bond and thus cannot stand as a valid <br />bond for federal lands. This assertion is incorrect. The only reclamation bonding requirements <br />now applicable to these federal lands are those found in the Colorado regulatory program, and <br />not those provided by federal law. <br />Colorado is a primacy state under SMCRA and has entered into a cooperative agreement <br />with OSM. 30 C.F.R. § 906.30. Accordingly, OSM has delegated to Colorado the authority to <br />permit and regulate mining operations on federal lands in Colorado. As a result of this <br />delegation, the provisions of the state program (and not federal regulations) are applicable to <br />federal lands, including the bonding requirements. OSM's regulations specifically recognize that <br />-3- <br />