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ARCO:: Legal 555 Se~enieen;n S;reel Denver C'oioraa-, :020= Teieenene _L3 .'3 ~+7~6 Fax 303 293 -~_ R. Kirk Mueller senor auorae. III IIIIIIIIIIIIIIII 999 RECEIVED MAR 1 g 1998 March 17. 1998 Ms. Susan McCannon Coal Program Supervisor Colorado Division of Minerals and Geology ]31? Sherman Street. Suite 215 Denver, Colorado 80203 Division of Minerals & Geobgy Re: West Elk Mine -Permit Transfer Issues, Permit No. C-80-007 Dear Susan: Our thanks to you and David Berry for meeting yesterday afternoon with Ed Hams and me to discuss our permit transfer questions involving Mountain Coal Company ("MCC"). We appreciate your guidance on what procedures should be followed to accomplish both of these changes. In the first transaction, Mountain Coal Company, a Delaware corporation, will be converted into Mountain Coal Company, L.L.C., a Delaware limited liability company ("MCC, LLC). This "new" legal entity will continue to operate and control the mine and associated facilities, so changes to the permit would be very limited. Reviewing Rules 2.03.4 and 2.08.6 of the Regulations of the Colorado Mined Land Reclamation Board for Coal Mining, it appears the only changes may be adding "L.L.C." after MCC's name and adding a statement to the permit text regarding the internal reorganization pursuant to Rule 2.03.4(1). The remainder of the information contained in the existing permit would remain accurate and current. As addressed in Rule 2.08.6 et. seq., the performance bond and insurance policies (except perhaps the name change) would remain the same for MCC, LLC as they are for MCC. Simply stated, MCC, LLC would remain, as MCC is now, a wholly owned subsidiary of ARCO. In the second transaction, the ownership of MCC, LLC will likely be conveyed to a joint venture company owned in large part by a new company. ARCO may retain a small ownership interest. This transaction will probably occur sometime around the first of Lune. MCC, LLC would continue to hold the permit and operate the mine. However, this transaction gives rise to several changes of particular interest to the Division. Performance bonding would have to be assumed by the new joint venture company, new insurance coverage would need to be arranged, and the names of new officers and directors would be subject to an AVS check. aibr.~c Pcni~c~'n ~~~.r :~. ~~,