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w I II IIIIIIIIIIIIIIII sss DATE: November 22, 1991 TO: Steve Renner, Frank Johnson FROM: Tom Gillis ~(~ RE: Hawk's Nest~ine, Disposition of Coal Silo Facility I received a letter from ARCO (copy attached) regarding a proposal for future use of the Hawk's Nest Coal Silo Facility by ARCO's West Elk mining operation. The operation is located approx. 1/4 mile from the silo facility and I believe ARCO has recently acquired title to the facility from the Rio Grande RR. Rio Grande was apparently able to obtain title to the facility from the Hawk's Nest Operator through some legal process associated with the lease agreement that existed between the railroad and the Hawk's Nest Mining Operation. As indicated in the attached letter, ARCO is looking into the possibility of using "left over" monies from the Hawk's Nest bond to help fund the eventual reclamation of the facility by ARCO if ARCO were to pursue adding the facility to their existing permitted mining operation. In previous correspondence to ARCO, the Division has indicated that if ARCO wishes to use the facility as part of their permitted mining operation, they must revise their permit accordingly and amend their performance bond to cover the cost of reclaiming the silos. However, in order to accomodate their inquiry, I am forwarding the request to management and the AG's office to see if there is any possibility of allowing some sort of cost sharing along the lines proposed by ARCO in the attached letter. Although this would be a clear departure from standard permitting procedure, I must point out that there is a very real possibility that MLRD may not have sufficient funds remaining from the forfeited bond to adequately reclaim the silo facility and complete all of the other remaining required reclamation work. Preliminary estimates from contractors for demolishing the silos, exclusive of coal stockpile disposal, regrading, and revegetation work, have ranged from $300,000.00 to $500,000.00. As can be seen from the attached Table I, we would only have approximately $314,000.00 left to reclaim the entire silo facility after all other disturbances associated with the Hawk's Nest Mine have been reclaimed. Additionally, there is a potential for significant liability to the state if we contract out the demolition work due to the need for ARCO to use, on a biweekly basis, the same rail line which passes through the Hawk's Nest Mine silos to load their own coal trains. ARCO's existing loadout facility is close enough to the Hawk's Nest facility such that the train must back up through the Hawk's Nest silos in order to load all of the cars. This situation in my opinion has the effect of substantially increasing demolition costs due to the necessity of keeping the rail line open during demolition work. This may also create a significant liability to the state if the tracks are damaged during demolition or if ARCO's coal loading operations are interrupted. Also, the local utility company has two high voltage power lines, each within 100 ft. of the silos, which need to be kept on line at all times to provide power to the surrounding community.