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Mountain's ability to operate and reclaim the affected area responsibly." (Hogan & Hanson; June 12,
<br />2006 & James WM. Stovall, P.C.; June 12, 1006)
<br />Division's Response - On Apri126, 2006 the Division notified King Mountain that the financial warranty
<br />for CN-Ol was not submitted and approved within one calendaz yeaz of approval of the application (CN-01
<br />was approved on March 15, 2005, and the additional financial warranty in the amount of $319,000.00 was
<br />not received until Mazch 27, 2006). Rule 4.1(2) states: "No permit maybe issued pursuant to the Act until
<br />the Boazd or Office receives and approves the Performance and Financial Wazranties required herein. If
<br />these warranties aze not received within one calendar yeaz of approval of an application for any new
<br />permit, amendment or conversion, the Boazd shall hold a heazing, in accordance with the notification and
<br />comment provisions of Rule 1.6, to reconsider the previous approval. If the Boazd affirms the original
<br />application approval, the Boazd shall establish a new deadline for submittal of the Financial and
<br />Performance warranties. If the required warranties aze not posted by the date set by the Boazd, the
<br />application shall be denied."
<br />Because a Financial Warranty was not received and approved within one calendar yeaz of approval, the
<br />Division scheduled a hearing before the Boazd to reconsider the previous approval of the conversion
<br />application. In addition, the Division required King Mountain to re-notice the application in a paper of
<br />general circulation in accordance with Rule 1.6.5(1), and to notify any new surface owners, easement
<br />owners, and owners of structures within 200 feet who were different from the names of those owners
<br />submitted in the original application. The hearing before the MLRB for reconsideration of CN-Olwas
<br />initially set for June 14-15, 2006, but was continued to September 13-14, 2006, and continued again to
<br />January 13-14, 2007.
<br />The operator has secured a sufficient Financial Warranty in the amount of $327,000.00, $319,000,00 in the
<br />form of a Letter of Credit from Community Banks of Colorado, and $8,000.00 in the form of a Corporate
<br />Surety from Pioneer General Insurance Company. Therefore, the issue of failing to post the bond within
<br />one calendaz yeaz has been and is being adequately addressed through the reconsideration process.
<br />3. "On a related issue, because the typical cost of construction in this remote azea is frequently double the
<br />cost of construction in urban areas (due to a lack of competitive earthmoving contractors and other trades
<br />and labor), the amount of the reclamation cost estimate and the bond set by the Boazd are inadequate"
<br />(Hogan & Hanson; June 12, 2006).
<br />Division's Response -C.R.S. § 34-32.5-117(4) states: "The boazd shall prescribe the amount and
<br />duration of financial warranties, taking into account the nature, extent, and duration of the proposed
<br />mining operation and the magnitude, type and estimated cost ofplanned reclamation." The statute also
<br />states: "In a single year during the life of a permit the amount of required financial warranties shall not
<br />exceed the estimated cost of fully reclaiming all lands to be affected in such yeaz plus all lands affected in
<br />previous permit years and not yet fully reclaimed. For purposes of this paragraph (b), reclamation costs
<br />shall be computed with reference to current reclamation costs." The amount of the financial warranty must
<br />be sufficient to assure the completion of reclamation of affected lands because, in the event of forfeiture,
<br />the Division must complete the reclamation.
<br />The Division calculates the financial warranty using software that contains accurate, reliable, and up-to-
<br />date cost data for mine reclamation work. The Division acquires cost data from several nationwide
<br />publications and local or regional data sources annually, and incorporates the data into the softwaze's
<br />customized menus and data tables. For reclamation work performed in Colorado, the Division uses labor
<br />rate, fringe benefit and employer burden (unemployment, FICA, worker's compensation) data from the
<br />Colorado Department of Transportation.
<br />Here, the cost estimated is based on the approved reclamation plan that called for a limited azea of
<br />disturbance at any given time (35 acres), topsoil replacement, reseeding using agrouse-friendly seed
<br />mixture recommended by the DOW, removal of old mining equipment and debris, sealing of the five
<br />monitoring wells, and indirect costs (i.e, liability insurance, performance bond, profit, and the reclamation
<br />
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