1. (1) No permit may be issued under this article until the board receives performance and financial warranties as described in subsections (2), (3), and (4) of this section.
2. (2) A performance warranty shall consist of a written promise to the board, by the operator, to comply with all requirements of this article. Performance warranties shall be in such form as the board may prescribe. Whenever two or more persons or entities are named as operators in a single permit, the operators may limit the scope of their individual performance warranties so long as their warranties, in the aggregate, warrant performance of all requirements of this article.

3. (3)

   1. (a) A financial warranty shall consist of a written promise, to the board, to be responsible for reclamation costs up to the amount specified by the board pursuant to subsection (4) of this section, together with proof of financial responsibility. Financial warranties may be provided by the operator, by any third party, or by any combination of persons or entities and shall be in such form as the board may prescribe.
   2. (b) The board may accept interests in real and personal property as financial warranties where the amount of the reclamation liability exceeds thirty million dollars. The board may determine the extent of a specified percentage of the appraised value of the property, not to exceed seventy-five percent of the appraised value. A person offering such financial warranty shall submit the information necessary to show clear title to and the value of the property.

   3. (c) The board may refuse to accept any form of financial warranty if:

      1. (I) The value of the financial warranty offered is dependent upon the success, profitability, or continued operation of the mine; or
      2. (II) The board determines that the financial warranty offered cannot reasonably be converted to cash within one hundred eighty days of forfeiture.

   4. (d) For nondesignated mining operations:

      1. (I) This subsection (3) shall be applicable July 1, 1993, to deeds of trust which are used as collateral for new financial warranties completed on or after such date;

      2. (II) This subsection (3) is applicable on January 1, 1996, to:

         1. (A) Deeds of trust existing as of July 1, 1993, and subsequent updates of the deeds of trust used as collateral for financial warranties.
         2. (B) (Deleted by amendment, L. 2025).
   5. (e) Any instrument offered as a financial warranty pursuant to this subsection (3) shall provide that the board may recover any necessary costs, including attorney fees, it incurs in foreclosing on or realizing any collateral used to secure such financial warranty if such financial warranty is forfeited.

   6. (f) Proof of financial responsibility may consist of any one or more of the following, subject to approval by the board:

      1. (I) A surety bond issued by a corporate surety authorized to do business in this state;
      2. (II) A letter of credit issued by a bank authorized to do business in the United States;
      3. (III) A certificate of deposit;
      4. (IV) A deed of trust or security agreement encumbering real or personal property and creating a first lien in favor of the state for liabilities exceeding thirty million dollars;

      5. (V) Assurance, in such form as the board may require, that:

         1. (A) Upon commencement of production or when site conditions and liabilities change, the operator will establish an individual reclamation fund, to be held by an independent trustee for the board, upon such terms and conditions as the board may prescribe, which trust fund shall be funded by periodic cash payments representing such fraction of receipts as will, in the opinion of the board, provide assurance that money will be available for reclamation; and
         2. (B) Prior to issuance of a permit, the operator will provide another form of financial warranty as described in this paragraph (f). As the reclamation fund increases in value, the other form of financial warranty may be decreased in value so long as the sum of financial warranties is that amount specified by subsection (4) of this section.
         3. (C) to (E) Repealed.
      6. (VI) and (VII) Repealed.
      7. (VIII) Proof that the operator is a department or division of state government or a unit of county or municipal government.
   7. (g) Any proof of financial responsibility submitted or revised on or after July 1, 1993, shall be in compliance with paragraphs (a), (b), and (c) of subsection (4) of this section.

4. (4)

   1. (a) The board shall prescribe the amount and duration of financial warranties, taking into account the nature, extent, and duration of the proposed mining operation and the magnitude, type, and estimated cost of planned reclamation.

   2. (b)

      1. (I) In any single year during the life of a permit, the amount of required financial warranties must not exceed the estimated cost of fully reclaiming all lands to be affected in said year, plus all lands affected in previous permit years and not yet fully reclaimed. For the purpose of this subsection (4)(b)(I), reclamation costs shall be computed with reference to current reclamation costs. The amount of the financial warranty must be sufficient to assure the completion of reclamation of affected lands if the office has to complete the reclamation due to forfeiture, including all measures commenced or reasonably foreseen to assure the protection of water resources, including costs necessary to cover water quality protection, treatment, and monitoring as may be required by permit. The financial warranty must include an additional amount equal to five percent of the amount of the financial warranty to defray the administrative costs incurred by the office in conducting the reclamation.
      2. (II) The office and the board shall take reasonable measures to assure the continued adequacy of any financial warranty.

   3. (c)

      1. (I) The board may:

         1. (A) From time to time for good cause shown, increase or decrease the amount and duration of required financial warranties;
         2. (B) By rule or permit condition require proof of value on a periodic basis of all or any group of warranties held by the board; and
         3. (C) By rule or permit condition limit certain types of warranties to specific purposes only or require a designated percentage of the total bond be held in easily valued and convertible instruments.
      2. (II) An operator or a financial warrantor has sixty days after the date of notice of an adjustment to fulfill the new requirements.

5. (5)

   1. (a) An operator may file a written notice of completion with the office whenever such operator believes such operator has completed any or all requirements of this article with respect to any or all of such operator's affected lands except for any such lands in designated mining operations. The office shall, within sixty days after receiving said notice, or as soon thereafter as weather conditions permit, inspect lands and reclamation described in the notice to determine if the operator has complied with all applicable requirements.
   2. (b) If the board or office finds that the operator has successfully complied with any or all requirements of this article, it shall release all performance and financial warranties applicable to said requirements. Releases shall be in writing and shall be delivered to the owner or operator promptly after the date of such finding.
   3. (c) If the board or office finds that the operator has not complied with applicable requirements of this article, it shall so advise the operator not more than sixty days after the date of the inspection.
   4. (d) If the office fails to conduct an inspection within the time specified in paragraph (a) of this subsection (5) or fails to advise the operator of deficiencies within the time specified in paragraph (c) of this subsection (5), then all financial warranties applicable to reclamation described in the notice shall be deemed released as a matter of law.

   5. (5.5)

      1. (a)

         1. (I) An operator may file a written notice of completion with the office upon completion of all requirements of this article with respect to any or all of such operator's affected lands at a designated mining operation.
         2. (II) The office shall inspect lands and reclamation described in any such written notice to determine if the operator has complied with all applicable requirements within sixty days after receiving such notice or as soon thereafter as weather conditions permit.

      2. (b) If the board or office finds that the operator has complied with all requirements of this article, it shall promptly deliver a written release of any performance and financial warranties, or portion thereof, to the owner or operator according to the following schedule:

         1. (I) An appropriate amount of the financial warranty for the applicable permit area shall be released when the operator completes the requirements of the approved reclamation plan; and
         2. (II) The performance warranty and the remaining portion of the financial warranty shall be released on such schedule as the board may prescribe; except that all remaining portions of the warranty shall be released at the end of the period described in paragraph (e) of this subsection (5.5) if, at that time, the affected land has been reclaimed for a beneficial use and is in compliance with all applicable performance standards.

      3. (c)

         1. (I) If the board or office finds that the operator has not complied with applicable requirements of this article, it shall so advise the operator not more than sixty days after the date of an inspection conducted pursuant to paragraph (a) or (e) of this subsection (5.5).
         2. (II) If the operator is not entitled to a release of the financial warranty, or portion thereof, pursuant to paragraph (b) of this subsection (5.5), the board or office may specify a reclamation schedule and adjust the amount of the financial warranty pursuant to paragraph (c) of subsection (4) of this section.
      4. (d) If the office fails to conduct an inspection within the time specified in paragraph (a) or (e) of this subsection (5.5) or fails to advise the operator of any deficiencies within the time specified in paragraph (c) of this subsection (5.5), then that portion of the financial warranties applicable to reclamation described in the notice or request for release shall be deemed released as a matter of law.
      5. (e) At such time as the board or office may prescribe, but no more than five years after the release of a portion of the financial warranty as described in subparagraph (I) of paragraph (b) of this subsection (5.5), the operator may file a written request for release of the performance warranty and the remaining portion of the financial warranty. The office shall inspect any lands and reclamation described in the request within sixty days after receiving such request or as soon thereafter as weather conditions permit to determine whether the affected land has been reclaimed for a beneficial use and is in compliance with all applicable performance standards.

6. (6)

   1. (a) Financial warranties shall be maintained in good standing for the entire life of any permit issued under this article 32. An operator or a financial warrantor shall immediately notify the board of an event that may impair the operator's or the financial warrantor's warranties.

   2. (b)

      1. (I) Each operator and financial warrantor providing proof of financial responsibility in a form described in subsection (3)(f)(V) of this section shall annually cause to be filed with the board a certification by an independent auditor that, as of the close of the operator's most recent fiscal year, the operator and the financial warrantor continued to meet all applicable requirements of the applicable subsection. An operator or a financial warrantor that no longer meets the requirements shall instead cause to be filed an alternate form of financial warranty.
      2. (II) Repealed.
   3. (c) Each operator and financial warrantor providing proof of financial responsibility in a form described in subsection (3)(f)(V) of this section shall notify the board within sixty days of a net loss incurred in a quarterly period.
   4. (d) Whenever the board receives a notice under paragraph (a) or (c) of this subsection (6), fails to receive a certification or substitute warranty as required by paragraph (b) of this subsection (6), or otherwise has reason to believe that a financial warranty has been materially impaired, it may convene a hearing for the purpose of determining whether impairment has in fact occurred.
   5. (e) Whenever the board elects to convene a hearing pursuant to this subsection (6), it may hire an independent consultant to provide expert advice at the hearing. The fees of the consultant shall be paid by the operator, and a consultant shall not be hired until the operator signs a written fee agreement in such form as the board may prescribe. In the event that an operator refuses to sign such an agreement, the board may, without hearing, order the operator to provide an alternate form of financial warranty.
   6. (f) At a hearing held pursuant to this subsection (6), if the board finds that a financial warranty has been materially impaired, the board may order the operator or the financial warrantor to provide an alternate form of financial warranty.
   7. (g) An operator or a financial warrantor has ninety days to provide an alternate warranty required under this subsection (6).
   8. (h) All hearings held under this subsection (6) shall comply with all requirements of article 4 of title 24, C.R.S.
   9. (i) (Deleted by amendment, L. 93, p. 1184, § 10, effective July 1, 1993.)
7. (7) and (8) Repealed.

Source: L. 76: Entire article R&RE, p. 742, § 1, effective July 1. L. 77: (1)(a), (1)(b), (2), (3), and (6) amended, p. 1562, § 2, effective June 2. L. 79: (1)(e) added, p. 1252, § 4, effective May 25. L. 81: (1)(e) amended, p. 1678, § 4, effective April 30; entire section R&RE, p. 1670, § 9, effective June 19. L. 91: (3)(a)(IX) amended, p. 757, § 33, effective April 4. L. 93: Entire section amended, p. 1184, § 10, effective July 1. L. 2019: (3)(f)(VI) and (3)(f)(VII) repealed and (4)(b)(I) and (6)(b) amended, (HB 19-1113), ch. 73, p. 267, § 2, effective August 2; (6)(c) amended, (HB 19-1113), ch. 73, p. 267, § 2, effective August 2, 2020. L. 2022: (7) repealed, (SB 22-212), ch. 421, p. 2983, § 77, effective August 10. L. 2025: (3)(b), (3)(d)(II), (3)(f)(IV), (3)(f)(V)(A), (4)(c)(II), (6)(a), (6)(b)(I), (6)(c), (6)(e), (6)(f), and (6)(g) amended and (3)(f)(V)(C), (3)(f)(V)(D), (3)(f)(V)(E), and (8) repealed, (SB 25-054), ch. 200, p. 891, § 8, effective August 6.

Editor's note: (1) This section is similar to former § 34-32-112 as it existed prior to 1976.

(2) Subsection (6)(b)(II)(B) provided for the repeal of subsection (6)(b)(II), effective September 1, 2021. (See L. 2019, p. 267.)

Cross references: For the short title (Legacy Mining and Modernization Act) and the legislative declaration in SB 25-054, see sections 1 and 2 of chapter 200, Session Laws of Colorado 2025.