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SETTLEMENT AGREEMENT IUSTTFICATION Blue Mountain Energy, Inc. Deserado Mine, Permit C-1981-018 Notice of Violation CV-2001-010 James C. Stevens, Conference Officer aLy The Notice of V iolation CV-2001-OIO was issued on May 14, 2001. The NOV was issued for the following problem "Failure to ensure that non-coal wastes including grease, lubricants, and other flammable liquids are placed and stored in a convolled manner in a designated portion of the permit area. Specifically, 10 to 12-55 gallon drums and several smaller containers of fluids, including oil, grease and surfactants had been placed in a location not approved or designed for such use." On July 20, 2001, an Assessment Conference was held at 1313 Sherman St., Room 520, Denver, Colorado. In attendance, in addition to the Conference Officer, were Mr. Scot[ Wansted[ and Mr. Leff Dubbert, representing Blue Mountain Energy, Inc. and Mrs. Sandra Brown and Mr. Dan Mathews representing the Division. Mr. Mathews presented testimony providing the details of the violation as outlined above. A number of barrels and other containers of oil, grease and surfactants were stored in two areas of a road "blister, referred to as Treasure island, which is designated as a storage area in the permit and currently serves as such for a vaziety of materials including equipment, timber, cable and spools, iron pipes and beams, old tires, bentonite, concrete, etc. This storage site, however, was no[ designated in the permit for storage of barrels of pevoleum products nor was it suitable for such storage. There aze storage sites designed for such materials in the permit area and so designated. Mr. Wansted[ contested the issuance of the violation saying that the Rule cited as being violated applied [o Non Coal Waste and [he materials in question were usable products and not waste materials. He also pointed out that there was nothing in the permit in regazd to the Treasure Island storage azea that specifically excluded the storage of pevoleum products and surfactants such as the materials in question. He also stated that by there being storage areas for barrels of pevoleum products designated in the permit only in certain portions of the permit area, e.g. in the Portal D area and, reportedly, at the dozer shed, the permit therefore limited the requirement to separate the storage of barrels of pevoleum products from other materials to only those areas. The Proposed Civil Penalty by the Assessment Officer for NOV CV-2001-010 is: History $0.00 Seriousness $$250.00 Fault $250.00 Number of Days Penalty Assessed 1 Good Faith $250.00 After hearing this testimony and considering the evidence presented, I have come to [he following conclusions: I agree with the Division that a violation did occur in that barrels of petroleum products and surfactants were placed in an area that was no[ designated or suitable for their storage. Hislorv I concur that a $0.00 penalty for history is appropriate. Seriousness I concur that the storage of such materials in the Treasure Island facility should be rated as being low in degree of seriousness. No environmental damage did occur, but there was the potential for such. Consequently a penalty of $250.00 is appropriate. Fault I concur that the degree of fault on the part of the mine for such storage should be rated as being low. Although mine management was apparently awaze that such storage was not appropriate, adequate convol of the initial storage of the materials in question was not exercised. Consequently, a penalty of $250.00 is appropriate. Number of Davs Penalty Assessed. I concur with 1 day.