The Legislative Audit Committee released May 27 a performance audit of the Mine Subsidence Protection Program at the Colorado Department of Natural Resources that finds administrative gaps and recommends rule updates, a renewed federal memorandum of understanding and written operational procedures.

The audit matters because the program is the state’s mechanism for paying to repair damage when ground collapses from historic underground coal workings. Dan Gibbs, executive director of the Department of Natural Resources, said his agency “is committed to the full implementation of all recommendations” and thanked auditors for their collaborative work.

Auditors told the committee the program was initially established with federal grant support and an MOU with the U.S. Department of the Interior’s Office of Surface Mining Reclamation and Enforcement (OSMRE). The audit found the MOU, which required periodic renewal, expired in 1998 and was never formally renewed; the program has been operating under the expired agreement while staff and OSMRE now work to establish a new agreement. The audit noted that the program’s plan of operations tied to the old MOU is out of date and that division staff did not routinely provide required reports to the board or to OSMRE; division staff told auditors they began providing those reports in April 2025.

Auditors assessed program performance and found low participation: roughly 860 homes—about 14% of an estimated 6,300 eligible structures—were enrolled. Claim activity is rare; in the past 11 years the program paid out relatively few claims, and the audit found only two approved claims in the most recent four‑year period. At the same time, costs for contractor inspections used for enrollment and claims investigations rose sharply after the division changed engineering contractors in 2019. The audit showed an enrollment inspection cost that had been about $425 in 2018 rose to an average of about $3,500 in 2024; initial claim inspection averages rose as well. Auditors noted two neighboring claims that prompted more than $200,000 in additional investigative expenses.

The audit recommended three steps: 1) ensure program rules and reporting comply with federal requirements by working with OSMRE and bring rules up to date; 2) establish written operational procedures and improve board reporting; and 3) evaluate whether program changes—such as expanding eligibility, modifying inspection practices, or considering private insurance options—would allow the trust fund to provide protection to more people for the same administrative costs. Division director Michael Cunningham told the committee the division agrees and expects to complete a new MOU with OSMRE by the end of the year, engage a consultant to document standard operating procedures, and pursue rulemaking with the Mine Land Reclamation Board as needed.

The audit also noted structural choices made when the program was created: Colorado’s program was established as a state trust rather than private insurance after 1980s studies concluded private markets would not reliably price subsidence risk. Auditors wrote that Colorado remained unique among the states they surveyed in inspecting every home at enrollment and charging a three‑year participation premium rather than an annual premium—practices auditors flagged for review given rising inspection costs and low enrollment.

Committee members asked how homeowners learned about the program; staff described mailings, door‑hangers and outreach to homeowner associations, and said additional outreach is planned. Auditors and department staff agreed that updated risk analysis and a review of eligibility and inspection policies would help the state use the program’s funds more effectively.

The committee voted to release the audit. The department will work with the Mine Land Reclamation Board, OSMRE and the General Assembly as needed to pursue rule and program changes supported by the audit’s findings.