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_....c ~_o~~Vr.~.,c5 LfD "AGE d3 Mr. David A. Berry December 28, 2000 Page 2 The Violations A][eged in the NO Vs Rrill Require 60 Davs to Abate. As we have previously discussed with you and others from the Division of Mmerals and Geology ("the Division"), Bowie's parent company, AEI Resources, Inc. ("AHI"), has reclamation bonds and other bonds from Frontier Insurance Company ("Frontier") totaling more than 5680,000,000. The Frontier bonds for the Bowie operations total approAmately $11,500,000. AEI cannot selectively replace the bonds for the Bowie operations in Colorado without triggering sirrn7ar demands from revelatory agencies in other states. Therefore, as a practical matter, AEI must replace all $680,000,000 worth ofFrontier bonds in order to replace the bonds applicable to the Bowie operations. This cannot be done within the etrrrent abatement period because AEI does not have the financial balance sheet to meet the current demands of the surety industry for bonding obligations of t}>is magnitude. In this regard, AEI has been working diligently for the past six momlss to completely restructure its financial arrangements nationwide, is order to free the credit necessary to replace all of its Frontier bonds. Within the next 60 days, AEI and Bowie aze confidem that one of the following events can occur: (a) AEI's lenders will substarttially exchange all of AEI's debt for equity and new dot, thereby freeutg AEI's credit for use in acgttiring new bonds; or (b) Bowie will be sold to new owners, who will have the credit available to acquire new bonds, and who have indicated that they possess a commiunent for bonding from an acceptable surety. AEI and Bowie are proceeding with both options simultaneously, on parallel tracks, and w;; aze confident that one or the other can be completed within the next 60 days. However, neither option can be wmpleted within the current abatement period. 2. A 60-Dav Extension of the Abatement Period Will Not Harm the State of Colorado. Acknowledging thaz we have been wonting on this issue since June, the Board's regulations allow an NO V abatement period of up to 90 days. However, the NOVs have set an abatement period of just 19 days, most of it during the holiday season when little can be accomplished towazd a resolution of the 5nancial issues surrounding replacement of the bonds. Bowie's requested extension of 60 days brings the total abatement period to otdy 79 days, well within the 90-day period atrthorized by the regulations. I respectfiilly submit that granting Bowie the additional 60 days will not harm the State of Colorado, for the following reasons: D0323672.1