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SETTLEMENT AGREEMENT JUSTIFICATION Twentymile Coal Company Foidel Creek Mine -Permit Number C-1982-056 Notice of Violation # CV-2005-006 Carl B. Mount, Conference Officer The Notice of Violation (NOV), CV-2005-006 was issued on May 13, 2005 and modified on May 17, 2005. The NOV as modified was issued for the following problems (Parts 3 and 4 were added as a result of modification): ^ Part 1: Failure to appropriately design a small area exemption treatment facility. Part 2: Failure to include a water pumping activity in the description of operations. ^ Part 3: Failure to include in the description of the NW Mains Ventilation Fan facility the potential for surface discharge of mine water from a pressure relief/accumulator pipe. Part 4: Failure to prevent a surface discharge of mine water from the NW Mains Ventilation Fan facility without first demonstrating compliance with Rule 4.05.2. On July 20, 2005, an Assessment conference was held at 1313 Sherman Street, Room 215, Denver, Colorado, 80203. to attendance, in addition to the Conference Officer, were Mr. Byron Walker and Mr. Dan Hernandez representing the Division of Minerals and Geology (Division) and Mr. Jerry M. Nettleton representing Twentymile Coal Company (TCC), Byron Walker and Dan Hernandez presented testimony outlining the details of the violation as stated above. TCC presented requests for vacation of Parts 1 and 2 of the original NOV. Reasons for the request to vacate Part 1 included statements that the Small Area Exemption (SAE) treatmeht structures were designed to meet all applicable regulatory requirements and have functioned properly in the past and that the situation experienced on May 2/3, 2005 was unanticipated and therefore more water was introduced into the SAE area than would be introduced from the normal design storm event for the SAE. Reasons for the request to vacate Part 2 included statements that TCC holds extensive water rights on both Fish Creek and its tributary drainages and that the observed pumping and use of this water was in accordance with those water rights. Additionally, TCC claims that the referenced regulatory sections (Rules 2.05.3(3) and Rule 4.04) provide no reasonable indication that small temporary support equipment, such as the portable pump observed, should or needs to be addressed in the permit as "support facilities". The Division noted that the pumping activities observed were taking place in an undisturbed area within a buffer zone protection area for Fish Creek. TCC also presented reasons for limiting or eliminating the civil penalty of $500.00 initially assessed for the violation. With regards to the civil penalty proposed, these reasons pertained to seriousness of the violation, fault and good faith efforts conducted by TCC to correct the problem.