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HOLLAND & HART <br />ATTORNEYS AT LAW <br />Mr. David Berry <br />Mr. Anthony Waldron <br />January 23, 1995 <br />Page 2 <br />marketing activities relating to the sale of coal to <br />customers, and has in no fashion given Mr. Perry any direct <br />or indirect managerial, supervisory, operational, <br />administrative or other authority to determine the manner in <br />which any entity has conducted coal mining or reclamation <br />operations. <br />With respect to the Kentucky Audit Violation No. <br />940243018 identified in the internal DMG memorandum dated <br />January 20, 1995, we checked with Costain, the ultimate <br />parent of Chapperal Coal Corporation in 2988, and learned <br />that the "violation" relates to some payment discrepancies <br />involving Pace Energies which had conducted some contract <br />operations for Chapperal. We understand from Costain that <br />within the last month or so a consent order was reached <br />between Chapperal and the State pursuant to which a series of <br />payments are being made to the State. Costain is checking <br />with the State to ensure this information has been or will be <br />made available to the applicant violator system data base. <br />Thus, Bowie assumes this matter is resolved and, in any <br />event, should not be the basis for any condition to attach to <br />the approval of the permit transfer to Bowie. I note that <br />Mr. Perry was in no way affiliated with Chapperal; rather he <br />was an officer (with only coal marketing responsibilities) of <br />a company which was 50% owned by Costain, the parent of <br />Chapperal. In short, Mr. Perry was an officer of a sister <br />subsidiary with no authority or ability to direct or <br />influence in any manner the activities of Chapperal. <br />I trust this information will resolve any outstanding <br />questions concerning the application of Bowie to transfer the <br />mine permit. Please let me know promptly if the DMG has any <br />additional questions or concerns, and please advise me when <br />the Office of Surface Mining has approved the AVS check. <br />Ver truly y urs, <br />Davis O'Connor <br />of HOLLAND & HART <br />Attorneys for Bowie <br />Resources Limited <br />cc: HSergent (by fax w/o enc.) <br />A.L. Perry (by fax w/o enc.) <br />