2017-05-01_INSPECTION - M1982112

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H O L LAND &HART P A ri126 2017 p ' Page 2 As described in further detail below, the Miller Pit appears to be in compliance with all requirements for well permitting and augmentation under Colorado statutes. Generally, a gravel pit that was excavated after December 31, 1980, and which exposes groundwater, must have a well permit issued by the State Engineer's Office and, where applicable, be covered by either a judicially-approved plan for augmentation or a substitute water supply plan approved by the State Engineer. See, e.g., C.R.S. § 37-90-137(11)(a). In this case, a well permit for the Miller Pit operation was issued to Robert Miller in 1989 as Permit No. 35808-F. A copy of the well permit is attached as Attachment A. Additionally, the Miller Pit is a covered structure under the plan for augmentation decreed on January 29, 1998 in the Application for Water Rights of Rick Hunt, Case No. 92CW106, Water Division 1 (the "Augmentation Plan Decree"). A copy of the Augmentation Plan Decree is attached hereto as Attachment B. The Miller Pit is described in the Augmentation Plan Decree as "an open sand and gravel mining pit according to the terms and conditions of the Mined Land Reclamation Permit Numbered M-82-112." See Attachment B, paragraph B.I at page 4. The Decree further provides that the Miller Pit "will be a portable excavation within the 80 acres described herein at no time will more than once acre of ground water be exposed." See id. It is our understanding that significantly less than one acre of ground water is currently exposed at the Miller Pit. Accordingly, the Augmentation Plan Decree appears to cover the current scope of operations at the Miller Pit. An augmentation plan requires a legally-available source of replacement water, or "augmentation water." The augmentation water supplies identified in the Augmentation Plan Decree for the Miller Pit include wastewater effluent supplied by the Town of Elizabeth (the "Town"). See id., at paragraph B.2. This augmentation water was originally provided under a 15-year water lease agreement with the Town executed in 2004. An updated Lease Agreement between Mr. Hunt and the Town was subsequently entered in 2010. A copy of that Lease Agreement is attached as Attachment C. The Lease Agreement provides for the lease of up to twenty acre-feet of augmentation water annually, and automatically extends for additional one- year terms unless terminated by either party. Records provided by the Town further indicate that the Lease Agreement is currently in effect and that lease payments have been received through 2016, and invoiced for payment in 2017. Production and water accounting data for the Miller Pit, prepared on behalf of Schmidt, indicates that water losses through product washing and evaporation totaled 1.914 acre-feet in 2016, which is well within the amount provided for under the Lease Agreement with the Town. The accounting is attached as Attachment D.