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STITES 8:HARBTSONPUr •„v~,fii Robert D. Clark, Esq. Cheryl A. Linden, Esq. Mazch 12, 2001 Page 2 Reclamation of the Po~vderhorn permit is guazanteed by approximately 52.9 million.in surety bonds3. Utica Mutual Insurance Company issued approximately $300,000 of the bonds. These bonds are not subject to the Colorado NOV. The remaining $2.6 million bond was issued by Frontier. Because the Powderhom permit covers both federal and non-federal lands, both DMG and the U.S. Office of Surface Mining are listed as obligees. II. FRONTIER'S LOSS OF ITS "T" LISTING DOES NOT CONSTITUTE A VALID BASIS FOR ISSUANCE OF AN I~TOV TO POWDERHORN The NO V and the Clark letter assert that Powderhom must replace the Frontier bond because Frontier has been delisted by the U.S. Department of the Treasury. In essence, the Clark letter asserts that a surety with a valid T listing is required for any bond covering federal lands and, in the alternative, for a bond covering any permit issued by DMG. In fact, Colorado cannot rely on Frontier's delisting as a basis for issuance of the Powderhom NOV. A. A Bond Covering Federal Lands is Colorado is not Subject to Federal Bonding Requirements. The Frontier bond was issued in favor of both DMG and OSM (for the federal lands). The Clark letter asserts that, because the bond was issued in favor of an agency of the United States, the bond is subject to the requirements of 3 ] U.S.C. §§ 9304-9308 and 31 C.F.R. Part 223, which require that all federal bonds be issued by a company holding a valid and current certificate of authority from Treasury. Since Frontier has lost its T listing, Colorado asserts that the Frontier bond is unacceptable as a federal bond and thus cannot stand as a valid bond for federal lands. This assertion is incorrect. The only bonding requirements that aze applicable to federal lands are those found in the Colorado regulatory program, and not those mandated by federal law. Colorado is a primacy state under SMCRA and has entered into a cooperative agreement with OSM. 30 C.F.R. § 906.30. Accordingly, OSM has delegated to Colorado the authority to permit and regulate minine operations on federal lands in Colorado. As a result of this delegation, the provisions of the state program aze applicable to federal lands, including the 3 The Clark letter states that one "environmental reclamation bond" wss posted by "Powderhom" (presumably Powderhom Properties) and that "Powderhom Coal Company did not pest any environmental reclamation bond." Clark Letter, pp. 3-4. 7ltis statement is incorrect. In fact, the bond that is the subject of the NOV in question was issued by Frontier and lists Powderhom Coal Company as principal. Powderhom Properties may have posted a separate performance bond payable to 9LM, but there is no record of a coal mine reclamation bond being issued on behalf of Powderhom Properties.