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Proposed Civil Penalty Assessment Picketwire Processing LLC /The New Elk Mine NOV CV-2006-003 September 29, 2006 Materials reviewed: Letters from the Division to permittee dated March 31, 2005, December 2Q, 2005, and August l8, 2006; materials found in SI-01, SL-02, SO-03, and TR-48 Division files. History [Rule 5.04.5(3)(a)]: No NOVs have been issued at this mine during the 12 months preceding the issuance of this NOV. The History component is therefore proposed to be set at $0. Seriousness [Rule 5.04.5(3)(b)]: The Seriousness component of a proposed assessment may range from $0 to $1750. The amount proposed depends upon whether the violation was one of performance requirements or of administrative requirements. This NOV was written for a violation of performance requirements. In the case of a violation of performance requirements, the amount to be assessed for Seriousness depends upon (I) the probability of the occurrence of the event which a violated standard is designed to prevent, and (2) the duration and extent of the potential or actual damage in terms of area and impact on the public or environment. (I) The laws, rules, and permit section cited in the NOV are designed to prevent the State of Colorado from assuming the reclamation liabilities of coal mine permittees. The probability of this occurring seems high as this mine has been under-bonded since March 31, 2005. (2) The permittee was informed on March 31, 2005 that the New Elk Mine was under-bonded by over $l.4 million. Since that time, the permittee has submitted a bond release application, an application for a technical revision, and an application for permit transfer Though the mine's under-funded liability was decreased to $923,410 on Apri19 2006 (the final approval date of TR-48), the mine being under-bonded since March 31, 2005 is significant. The Seriousness component of this assessment is therefore proposed to be set at $1000. Fault [Rule 5.04.5(3)(c)]: The fault component of a proposed civil penalty assessment may range from $0 to $1500. Assessments of"unavoidable" violations may range from $0 to $250. Assessments for violations that were the result of "negligence" may range from $250 to $750. Assessments for violations that resulted from "intentional conduct" may range from $750 to $1500. Failure by the permittee to maintain a bond in its required amount appears highly negligent. The Fault component is therefore proposed to be set at $750. Good Faith in Achieving Compliance [Rule 5.045(3)(d)]: The NOV has not been terminated. Therefore, a reduction in the proposed amount of the civil penalty for good faith efforts is not proposed at this time. Good faith credit is therefore proposed to beset at $0. The Total Proposed Civil Penalty Assessment for this NOV is therefore set at $1750.