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James B. Holden <br /> Page 2 <br /> Moreover, you mentioned the case of Grassy Gap coal mine as an <br /> example of a situation in which the Division did not go through <br /> the state procurement process. However, the facts of that matter <br /> are different from those of the present case. In Grassy Gap, the <br /> operator allowed its permit to expire. The Division did not for- <br /> feit the bond until after reclamation was complete. Rather, as <br /> the operator did reclamation work, the Division released amounts <br /> from the bond proportional to the work done. Consequently, un- <br /> like here, the Division in the Grassy Gap situation never <br /> held funds from the bond. **1 <br /> 1** It should be noted that even if the Procurement Code did not <br /> apply, the contracting procedure proposed by Mid-Continent had <br /> fatal drawbacks. Your letter acknowledges the Division's right <br /> to hold and expend the funds, and states that the procedure pro- <br /> posed by Mid-Continent would have allowed the Division to approve <br /> all contracts to be let. However, it is also true that the pro- <br /> posed contract gave Mid-Continent substantial approval authority <br /> over the contracts and reclamation. Indeed, Diane Delaney made <br /> it clear that Mid-Continent thought it should have joint <br /> decision-making power over reclamation. Such a position is con- <br /> trary to the Division's statutory responsibilities, especially <br /> considering that the permit has been revoked, the bond has been <br /> forfeited, and Mid-Continent has voluntarily petitioned in bank- <br /> ruptcy. <br /> In addition, Mid-Continent's proposed contract did not require <br /> payment and performance bonds from contractors to whom reclama- <br /> tion funds would be paid. These bonds are essential for adequate <br /> protection of the reclamation funds and the reclamation work. <br /> Moreover, the procedure for any work to be done by Mid-Continent <br /> itself was complicated. Mid-Continent does not have the funds to <br /> pay for worker's compensation insurance. Consequently, Pitkin <br /> Iron, Mid-Continent's sister corporation, was to hire employees <br /> to do this work. Pitkin was to be paid for its administrative <br /> expenses from the Division's reclamation funds. This procedure <br /> injected yet another party into the process and another layer of <br /> administrative expense. Overall, then, Mid-Continent's proposed <br /> contracting procedure was not an acceptable one. <br />