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POST OFFICE BOX 518 SOMERSET, CO 81434 (303)929-5775 1 RECEIVED May 09, zooo MAY 112000 Mr. Jim Burnell Division of Minerals and Geology Department of Natural Resources 1313 Sherman Street, Room 215 Denver, Colorado 80203 Division of Minerals 8 Geology Dear Mr. Bumell: As the Division of Minerals and Geology is aware the Bear Coal Company, Inc., ceased mining operations in November, 1996, due to the lack of economic minable reserves wupled with the extreme poor mining conditions. In early 1997, Beaz Coal installed permanent seals within the three portal entries along with installing drains in all three of the mine portals. Immediately after the sealing of the portals Beaz began the process of reclaiming the portal azea of the property, including seeding of the entire portal area. At the time of closure, Bear Coal did not have any Clow of water from any of the portals or any water flow from the azound the portals. The Division, and Bear Coal, had regularly inspected the reclaimed area and noticed no flow from the areas involved. Reclaimation was in progress concurrently azound the stacking tube area of the mine property. Employees of Bear noticed a lot of water in and around the area of the draw off tunnel. The water required to be pumped several times per shift in order to proceed with the demolition of the area. Still no water was noticed coming from the sealed portal azea. In the latter portion of the year the hillside immediately to the west of the stacking tube began movement bringing in rocks and debris onto Bear Coal's old stockpile area. The movement of the hillside continued for an extended amount of time, to the point that water began coming out of the hillside immediately west of the old stacking tube conveyor. Employees of Bear Coal noticed the majority of the movement ceased at or about the time the water began existing from the hillside. At this time the Division was notified. The Division came and inspected the hillside as well as the water exiting. After the inspection of the area a Notice of Violation was issued to West Elk Mine for the water that was coming out of the hillside at Bear Coal. Soon after the issuing of the Notice, West Elk began an extensive campaign to combat the Notice of Violation, including dating of the water, dissolved oxygen content and many other tests were conducted by West Elk on the water coming from the hillside on Bear's permit property versus the water that was being stored in their northern abandoned longwall panels. Arguments to ownership of the water still exist today. Bear Coal did not have water immerging from their portals, and still do not have water coming from their portals, (see photo #1). The photo shows the snow covered portal azea without water discharging from any of the three portals. West Elk has convinced the Division that the water does not belong to them, so the question of water ownership comes to light. A lot of theories can be addressed in this area but the