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Snell &Wilmer <br />L.L.P. <br />On December 14, 2000, Powderhom received a Notice of Violation (No. CV-2000-010). <br />The DMG based the NOV on its determination that Powderhom ceased to possess bond coverage <br />required by Colorado law when the United States Department of Treasury revoked the certificate <br />of authority issued to its surety, Frontier, pursuant to 31 U.S.C. §§9304-9308. The DMG warned <br />that failure to abate the NOV by obtaining a replacement bond would cause the DMG to seek <br />forfeiture of the Bond. <br />In a letter dated January 12, 2001, DMG extended the abatement date to and including <br />Mazch 14, 2001. As part of the extension, DMG requested that Powderhor submit periodic <br />reports concerning the progress being made in 1) obtaining a replacement bond, 2) seeking an <br />alternative form of acceptable financial assurance from Frontier, and 3) other avenues that might <br />lead to resolution of the NOV. Powderhor has dutifully and timely submitted four fortnightly <br />reports as ordered by DMG. (See attached Fortnightly Reports.) <br />Powderhor is a debtor in possession having filed a petition in bankruptcy (Chapter 11) <br />in the United States Bankruptcy Court for the Eastern District of Kentucky. Powderhom's <br />bankruptcy case is administrated with the bankruptcy case of its pazent, Quaker Coal Company <br />("Quaker"), and 18 other subsidiaries of Quaker. <br />Petition <br />By this petition, Powderhom requests a formal review of the NOV before the Board. <br />Powderhom requests that the Boazd rescind the NOV as having been issued without authority of <br />law. As set forth below, Powderhor respectfully submits that it has satisfactory bond coverage <br />notwithstanding the delisting of Frontier by the U.S. Department of the Treasury, and that <br />Powderhor, at all times, has met its obligations under the laws administered by the Board. <br />As a matter of law, rescission of the NOV is the proper course of action for the Board. <br />Neither the state, the public health, nor the environment will be hazmed by recision. Mining has <br />ceased at the Powderhor Mines. The DMG has not alleged a violation arising from <br />Powderhorn's own actions, and Powderhom is proceeding with activities necessary to implement <br />its reclamation plan. Moreover, there has been no finding by the DMG that Frontier is not <br />capable of meeting its obligations under the Bond, and the Bond remains in full force and effect. <br />Last, the actions threatened by the DMG will irrepazably harm Powderhom, and contrary to the <br />State's interests, will threaten Powderhorn's ability to implement its reclamation plan. <br />I. <br />THE FRONTIER BOND REMAINS IN FALL FORCE AND EFFECT <br />The Bond remains in full force and effect. To the best of our knowledge, Frontier has not <br />defaulted on any sureties it has written and continues to meet its obligations on a nationwide <br />basis. Under the terms and conditions of the Bond, Frontier may not cancel the Bond and must <br />comply with all obligations created by the Bond. In addition, at a meeting on March 9, 2001, <br />Frontier represented that these liabilities were covered by an aggregate reinsurance agreement <br />-2- <br />