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.. • • ~O~F~~F~TIAL <br />,. <br />relinquishing the Lease, which likely would result in the <br />permanent loss and waste of the mineral resource, particularly <br />in light of the minimum quantity of recoverable reserves <br />remaining in the Lease. <br />If this Lease suspension is granted as requested, Powder- <br />horn would plan to apply for a right-of-way or temporary use <br />permit under the regulations at 43 C.F.R. 2800 in order benefi- <br />cially to use the Lease to extract coal from adjacent leases <br />when it becomes necessary after production from the Mines <br />resumes. <br />In this case, the primary, but not exclusive, benefit of <br />the Lease suspension is the suspension of the requirement to <br />pay advance royalties in lieu of production. This benefit is <br />very important since the Lease may be in suspension for a <br />period of time far in excess of 10 years. Advance royalties <br />only may be paid for 10 years under Section 7 of FCLAA. <br />Because of this inflexible statutory limit, payment of advance <br />royalties in lieu of production is not a viable option for this <br />Lease. If Powderhorn were left with no other option than to <br />pay advance royalties in lieu of production, the remaining <br />reserves in the Lease would be lost because the Lease would be <br />subject to cancellation in a court of competent jurisdiction <br />when the eleventh advance royalty payment would become due <br />September 1, 1997. Clearly, payment of advance royalty for <br />this Lease is not in the interest of conservation, given the <br />unique circumstances surrounding the Mines and of this Lease. <br />- 5 - <br />