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Compatibility Adjustments for Renewed Grazing: At the request of the grazing lessee, portions of the <br />processing area are being fenced to keep the cattle away from the ponds. Discussions with the grazing lessee has <br />shown that the intent is to implement far better grazing management on their lease than occurred with the <br />previous grazing lessee. Extensive fencing will be installed throughout the grazing lessee area and they have <br />stated they will use carefully managed rotation grazing rather than the quasi -open range approach used by the <br />previous lessee that resulted in such devastation of the grasslands it has taken nearly a decade for them to <br />recover. <br />Of particular concern to Schmidt is avoiding intense impact on the riparian forests and wetlands along <br />Coal Creek that occurred previously as a result of grazing. Although Schmidt has been fully released from the <br />remediation portions of the 404 permit along Coal Creek, the requirements of that permit remain applicable to <br />who ever owns the land after the remediation is completed. That means that the State of Colorado is now <br />responsible for compliance with the 404 permit terms which primarily involves the protection of the riparian <br />corridor. <br />Schmidt Construction 2015 Annual Report M- 1988 -044 Coal Creek Resources Page 2 of 2 <br />