2011-08-29_REVISION - C1982056

• Permit No: C1982056
• IBM Index Class Name: REVISION
• Doc Date: 8/29/2011
• Doc Name: Bond Adjustment Conference Call Based on 2010 Midterm Review
• From: DRMS
• To: Twentymile Coal Company
• Type & Sequence: MT6
• Email Name: JDM
• Media Type: D
• Archive: No

DIVISION OF RECLAMATION, MINING AND SAFETY
Department of Natural Resources
1313 Sherman St., Room 215
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]
August 29, 2011
Mr. Jerry Nettleton
Twentymile Coal Company, LLC
29515 Routt County Road #27
Oak Creek, CO 80467
RE: Foidel Creek Mine (Permit C- 1982 -056)
Bond Adjustment Conference Call based on 2010 Midterm Review
Dear Mr. Nettleton,
During the 2010 Midterm Review and in accordance with Rule 3.02.2(4), the Colorado Division of
Reclamation, Mining, and Safety (CDRMS) reviewed the amount of reclamation bond required for the
Foidel Creek Mine Permit No. C- 1982 -056 (see Item 24 of the November 3, 2010 Midterm Review).
Based on the Division's estimate for the 2010 Midterm Review the Twentymile Coal Company's
(TCC) bond for permit C -1982 -056 is not sufficient to cover the reclamation costs in the event of
forfeiture.
Through Minor Revision No. 251 (MR -251) approved on June 20, 2011, TCC adequately addressed all
2010 Midterm adequacy questions including Item 24. However, due to the utilization of a Minor
Revision to address adequacy items, the notification of an opportunity for an informal conference per
Rule 3.02.2(4)(a) was not provided to TCC. In a letter dated July 6, 2011, the Division provided notice
of the proposed bond adjustment and an opportunity for an informal conference concerning the bond
adjustment pursuant to Rule 3.02.2(4)(a). Based on the above mentioned letter, TCC personnel
requested a conference call to discuss the bond adjustment before an informal conference is requested.
On August, 7 2011, at 9:00 am, a conference call was held with me (Jason Musick), Dan Hernandez,
and Jim Stark representing the Division and you (Jerry Nettleton) representing Twentymile Coal, LLC.
The purpose of the call was to discuss the Division's calculation of indirect costs on the 2010 Midterm
Review cost estimate for the Foidel Creek Mine (MT -06). More specifically, TCC had called into
question the Division's practice of adding the Engineering Work/Bid Preparation and Reclamation
Management/Administration costs to the estimate based on the contract amount rather than the direct
cost amount. Based on the information provided by TCC, the Division researched several sources and
has come to the conclusion that the Division does, in fact, add the indirect costs for Engineering
Work/Bid Preparation and Reclamation Management/Administration correctly. The rational, along
with a brief discussion of how the Division derives it costs (both direct and indirect) is provided below.
Office of
Mined Land Reclamation
STATE OF COLORADO
COLORADO
D I V I S I O N O F
RECLAMATION
MINING
— &—
SAFETY
John Hickenlooper
Govemor
Mike King
Executive Director
Loretta E. Pineda
Director
Office of
Denver • Grand Junction • Durango Active and Inactive Mines