1994-02-06_GENERAL DOCUMENTS - C1981017

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consistent with the Debtor's own estimate. In making this estimate, the Division assumed that the Debtor would not perform the work and that the Division would have to contract out the work. Approximately $550,000 of the bond was allocated to contractors' profit, performance bonds, insurance, and similar items. The direct cost of reclamation was estimated at $2,400,000. Out of this amount, $800,000 was allocated for removal of structures. Because the Debtor believes that the value of the Rockdust Plant securing the Debtor's reclamation obligations is less than the probable cost of reclamation, the Debtor has looked for opportunities to perform an environmentally responsible reclamation plan at lower cost. One such opportunity relates to liquidation of the property located at the Mine site. There are numerous activities required under the Debtor's reclamation plan which will be performed as part of the liquidation program. For example, the Debtor expects that structures located at the Mine site will be dismantled and sold, either for reassembly elsewhere or as scrap; removal of structures also is required as part of the reclamation plan. In negotiating the M&E Contract, the Debtor sought and obtained a number of provisions which obligates M&E to perform activities which serve reclamation objectives. Those provisions require M&E, at its expense, (i) to remove all structures located at the Mine Site, including structures located at upper portals and at the rail load-out facility, excluding concrete pads and cinder block or concrete buildings, on or before July 1, 1994 ; (ii) to remove all metallic scrap, tires, wood, or other non-metallic scrap, excluding hazardous materials such as asbestos or PCB's, from the Mine Site and load-out facility. Removal of metallic structures to foundations should substantially reduce the cost of removal estimated under the reclamation plan by $500,000. M&E is required to use reasonable efforts to coordinate its salvage activities with the Division's reclamation requirements. A second opportunity to lower the cost of reclamation involves possible post-mining uses of property which would eliminate the need to remove certain improvements. For example, the Debtor is investigating converting a large storage structure at its train loadout facility, formerly used for storing coal, into a warehouse facility. A third opportunity to lower costs is using, where possible, equipment which is owned by the Debtor, thus saving the considerable cost of renting similar equipment. The M&E Contract, while generally providing for the sale of all equipment, designates certain equipment which the Debtor believes will be useful to reclamation activities, and permits the retention of such equipment for up to three years. 15