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Snell & Wilmer LL.P Mr. Mike Long Division of Minerals and Geology 1313 Sherman Street, Suite 215 Denver, CO 80203 December 29, 2000 Page 4 environment, the DMG must provide 90 days to abate the alleged violation as it is the only ~ "reasonable period." I V. ANY EFFORT TO FIND POWDERHORN IN VIOLATION OR TO FORECLOSE ITS BOND WOULD BE INEQUITABLE AS POWDERHORN IS NOT CONDUCTING COAL MINING OPERATIONS AND IS PROCEEDING WITH ACTIVITIES NECESSARY TO IMPLEMENT ITS RECLAMATION PLAN IN ACCORDANCE WITH STATE LAW Powderhom understands how Frontier's current status creates a difficult situation from the State's perspective. However, should [he State determine that Frontier's status creates an unabated violation by Powderhom, it will have unfair and probably unintended consequences to both Powderhor and Quaker, which could affect the bankruptcy reorganization, and possibly the ability of [he company [o carry out the reclamation plan. An unabated violation could result in a permit block against Quaker and its subsidiaries under the Applicant Violator System. Yet, there is very little risk to the State and the public in allowing Powderhom a reasonable period of time to seek to obtain replacement coverage, if it is determined to be required by the State. / Even were the State inclined to seek foreclose of the Bond, State law identifies limited circumstances under which DMG may iake such drastic measures. In particular, the regulations state that a Bond may be forfeited when the "permittee has violated any of the terms or conditions of the bond and has failed to take adequate corrective action." 2 CCR 407-2, 3.04.1(1)(a) (emphasis added). Here, Powderhom has violated no term or condition of its Bond. Rather, the Stale is directly imputing a violation as a result of the status of Frontier, despite the ~ fact that Frontier has not been found incapable of meeting its surety obligations. The regulation also provides the permittee the opportunity to take corrective action. The 30 day period provided by the State to abate the NOV is too short a timefranre to reasonably expect Powderhom to be able to take corrective action. The bankruptcy creditor's committee and the inactive status of the mine make it difficult to find a surety willing to provide a bond. DMG may not foreclose the bond until it can be shown that Powderhom has "failed to take ~ adequate corrective action" and a reasonable amount of time has passed. Finally, Powderhom continues to work diligently with the State in finalizing its reclamation plan for implementation. The onset of litigation and attention that could result from an enforcement or Bond forfeiture proceeding can only serve to delay implementation of on-the- , ground reclamation. 6J3~.1