The BLM and the DEQ completed an EIS for the proposed mine expansion, which 

 included a revised land reclamation plan, and the agencies issued a Record of Decision 

 approving the expansion in October 1996. The BLM's decision to expand the mine was 

 appealed to the federal Interior Board of Land Appeals (IBLA) by citizen groups and 

 the Fort Belknap Tribes in late 1996. The state's decision to approve the mine 

 expansion was challenged in state court by citizens' groups and the Fort Belknap 

 Tribes in early 1997. The IBLA issued an order in June 1997 to stay the mine expansion 

 approval pending further administrative review of the BLM decision. In January 1998, 

 Pegasus and ZMI filed for bankruptcy protection before the IBLA issued a ruling, and in 

 March 1998, the companies announced their decision to not proceed with the mine 

 expansion but to close and reclaim the mines instead. 



The agencies voided the now-moot 1996 mine expansion decision in June 1998, issued 

 a new Record of Decision, and attempted to increase the surface reclamation bond 

 based on the revised reclamation plan reviewed in the 1996 EIS, acknowledging at 

 that time that the existing bonds were an estimated $8.5 million less than what was 

 needed to implement the agencies' preferred reclamation alternative. Pegasus 

 objected to the BLM's June 1998 selection of reclamation alternatives, which would 

 have increased the bond amount and appealed the decision to the IBLA. The 

 additional bonds were not provided as the bankruptcy actions moved forward. 



In November 1998, the DEQ signed a settlement agreement with Pegasus' sureties, 

 National Union Fire Insurance Company and the United States Fidelity and Guarantee 

 Company, that made available to the state the balance of the unspent reclamation 

 bonds and water treatment bonds required under the previously approved reclamation 

 plan and the Consent Decree. The bond funds available to the DEQ. for the Zortman 

 and Landusky mines are as follows: 



$10,024,000 Zortman reclamation bond 



$19,600,000 Landusky reclamation bond 



$ 2,040,970 Construction assurance - for water capture and treatment plants 



(bond was $10,100,000 but Pegasus had built much of the 



infrastructure) 

 $13,895,101 Water treatment bond for 20-year operation and maintenance 



(bond was $14,626,422 but Pegasus had paid for 1 of the 20 years 



prior to settlement) 

 $ 389,000 Exploration permit reclamation bond 

 $ 295,485 Open-cut mine reclamation bond for an offsite clay pit. 



