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Mr. Ross Gubka, P.E. Western Fuels-Colorado February 9, 2007 Page - 6 - hole and well reclamation costs using costs derived from contractor surveys, other state regulatory programs, published equipment cost and supply costs data, and actual costs incun•ed by the AML program at sites in Colorado. These costs aze updated annually. We believe this method is accurate and provides a correct estimate of drill hole reclamation costs in Colorado. As discussed above in Item 1 under the January 30's meeting header, however, our estimated costs have been revised to allow for gravity filling of some of the wells on site. 6. WFC suggests the use of the Wyoming Guideline for culvert removal. Again, the Division's cost estimates aze based on published data (based on nationwide contractor surveys) and actual costs incurred by the AML program, which we believe to be accurate. The Division is fully awaze that coal operators might be able to complete reclamation costs for their own permitted sites at costs less than what the Division might estimate. The cost estimate is an estimate of what the State would have to pay if a permit is revoked and the bond is forfeited. The Division's costs are intended to reflect what the Division would incur in hiring an independent contractor who is likely not familiaz with the site, would not necessarily be inclined to curb production expenses, and who would be subject to all of the contracting requirements of the state (bonding and insurance requirements, no change orders, etc.). Task #001 1. The unadjusted drill rate is based on a rotary blast hole drill in medium density rock. If WFC has site specific data from its blasting contractor, the Division will review that data and apply it to our cost estimate if we believe it is acceptable. 2. The altitude correction factor (percent of flywheel horsepower available at given altitudes) is different for each piece of equipment, depending on the engine type and horsepower. For example, a D8R bulldozer operating at altitudes between 5000 and 7500 feet would provide 100 percent of flywheel horsepower, but a 966G loader would only provide 92 percent. The Caterpillaz Handbook illustrates a range as low as 81 percent for some pieces of equipment at altitudes between 5000 and 7500 feet. A rotary blast hole rig will provide 97 percent flywheel horsepower at 5700 feet. 3. The job efficiency factor of 0.67 was in error and has been revised to 0.83. 4. The Division will review any drilling production documentation provided by WFC and revise this rate as necessary. 5. Ownership costs apply to all equipment hours, regazdless of whether it is idle. Even if a machine is sitting idle, the costs of the operator and equipment