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Page 2 May 7, 2008 <br />Bayfield Pit No. 1 has been cited for unauthorized discharges to the Pine River. Moreover, land <br />held in trust by the United States government for the benefit of the Tribe borders the existing <br />mine and area of proposed expansion. Accordingly, the Tribe is particularly interested in <br />ensuring that the proposed expansion and existing operation rigorously comply with all <br />applicable law in a manner best calculated to protect the natural environment during operation <br />and guarantee thorough, effective reclamation when operations cease. <br />THE APPLICANT HAS NOT DEMONSTRATED AN ADEQUATE WATER SUPPLY FOR THE MINE. <br />Rule 3.1.6 requires that: <br />(1) Disturbance to the prevailing hydrologic balance of the affected land and of <br />the surrounding area and to the quantity or quality of water in surface and <br />groundwater systems both during and after the mining operation and during <br />reclamation shall be minimized by measures, including, but not limited to: <br />(a) compliance with applicable Colorado water laws and regulations <br />governing injury to existing water rights. <br />Thus, a permit cannot be granted unless and until the Applicant has shown compliance with <br />Colorado water law. Under prior ownership, the Bayfield Pit No. 1 was operated pursuant to a <br />plan of augmentation decreed in Case No. 03 CW 65 by the Colorado Water Court for Water <br />Division 7. Attached hereto as Exhibit B. Under the terms of this plan of augmentation, the <br />augmentation of up to 28.39 acres of pond surface area was permitted. See Exhibit B ¶11(b). <br />Any increase in the surface area of the ponds that would result from the permit amendment <br />proposed by Applicant is unauthorized under the terms of the augmentation plan and in violation <br />of Colorado water law. <br />In addition, and in particular, the Tribe is concerned with the comments provided by the <br />Colorado Division of Water Resources on this matter that indicate that the Applicant may not <br />own the water rights necessary to operate the plan of augmentation. See attached Exhibit C. To <br />the extent that the applicant does not own these water rights, not only is the amendment of the <br />permit impermissible, continued operation of Bayfield Pit No. 1 under the terms of its existing <br />permit is similarly unauthorized. Although the Applicant has applied for new absolute and <br />