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Snell &Wilmer L.L.P. Instead, the Clark letter asserts that the Bond must be replaced because certain "facts cast serious doubt on Frontier's financial ability to honor its obligation under the Bond." Clark Letter, p. 6. Rule 3.02.4, however, sets forth the specific circumstances that constitute surety "incapacity," and "doubt as to financial ability" is not one of them. Since there is no allegation-- much less afinding--that Frontier is bankrupt, insolvent, or had its license suspended or revoked, Frontier cannot be considered to be incapacitated for purposes of determining whether the Bond must be replaced. Furthermore, it is not clear that the authority to make such findings even resides in DMG, as it appeazs to be in the exclusive province of the Colorado Commissioner of Insurance, and subject to certain due process requirements. z Thus, Powderhor has no reason or obligation to replace the Bond. IV. EVEN WERE FRONTIER DETERMINED TO BE INCAPACITATED, POWDERHORNNEED NOT OBTAINA REPLACEMENT BOND Even if Frontier were incapacitated Powderhorn would not be in violation of any applicable Colorado regulation because it has ceased all mining operations. Failure to replace a surety deemed to be incapacitated, in and of itself, does not constitute a violation of any Colorado law or regulation. Failure to replace a bond issued by an incapacitated surety coupled with the continuance of mining operations does constitute a violation. The applicable regulation states that, "[u]pon the incapacity of a surety ..., the permittee shall be deemed to be without bond coverage in violation of 3.02.1(2)." 2 C.C.R. 407-2, Rule 3.02.4(2)(b)(v)(C). That provision states: An operator shall not disturb surface acreage or extend any underground shafts, tunnels or operations prior to approval of the permit and receipt of approval from the Division of a performance bond covering surface acreage to be affected. The act that creates the violation is the continuance of mining operations after the surety is deemed to be incapacitated. Powderhom is not conducting coal mining operations or any of the activities otherwise enumerated by the regulation. Instead, Powderhom is reclaiming the mines. All mining disturbance occurred during the period in which Frontier maintained its federal certification. As a result, even if DMG had the authority and correctly determined there to be "incapacity of a surety," it may not declare Powderhom in violation of Colorado's bonding requirements.3 ` Colorado's insurance statutes authorize the Commissioner to suspend or revoke a company's certificate of authority to do business if the company is insolvent or impaired, as those terms aze defined in the statute. C.R.S. § 10-1-111. 3 Furthermore, shortly after Powderhor acquired the Mines in 1997, the state required that the Bond amount be increased, and Powderhom complied with that requirement. Thus, Powderhor has fully complied with the Colorado regulations concerning the posting of a reclamation bond. -6-