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ADMINISTRATIVE. ENFORCMENT. AND CIVIL ACTIONS <br />During the late 1980's and early 1990's the Coal Basin Mine, operated by Mid - Continent <br />Resources (Resources), was the subject of heightened regulatory scrutiny from DMG, primarily <br />as a result of a number of violations issued to Resources. Many of the violations involved issues <br />related to maintaining the hydrologic balance of the Coal Basin watershed. <br />In 1990, the Division determined that a pattern of violations existed at Coal Basin, therefore, a <br />Show Cause Order was issued to Resources. Resources ceased operations at the mine, and <br />subsequently filed for Chapter 11 bankruptcy protection. Further, a local community based <br />group filed a petition with the Office of Surface Mining (OSM) requesting that they assume <br />regulatory responsibility for the site. <br />Ultimately, a Settlement Agreement between Resources and the Division was enacted to resolve <br />the Show Cause Order. This agreement required that the operating permit be updated to resolve <br />the many concerns generated by the Division, OSM and the public, and that the permit be <br />transferred to a solvent company, or, failing this, that reclamation be initiated within specific <br />guidelines. <br />Shortly after finalization of the Settlement Agreement, Resources' negotiations with potential <br />purchasers failed. As a result, Resources was required to initiate reclamation operations, and to <br />complete specific reclamation tasks within the previously specified time frames. Because <br />Resources was bankrupt and had failed to comply with the required tasks, the Mined Land <br />Reclamation Board (Board) brought suit against the principals of Resources. The suit had two <br />thrusts; the first was to require the principals to provide funds sufficient to assure that <br />reclamation as required could be accomplished. The second was, failing the first request, to <br />require the principals to accomplish reclamation pursuant to the Agreement. <br />The Eagle County District Court dismissed the suit in the Spring of 1995, stating, in part, that the <br />State, at that point in time, could not show that it had been damaged as a result of any perceived <br />lack of adequate funding. The Division appealed the part of the District Court's ruling which <br />stated the Division was estopped from asking for more than $3 million for reclamation costs. In <br />its Opinion, the Colorado Court of Appeals left open the possibility for the Division to seek more <br />than $3 million for reclamation costs in a future action. <br />RECLAMATION FINANCING <br />Funding to complete reclamation is provided through the bankruptcy liquidation plan. The plan <br />specifies that the Division will receive 69% of all monies generated by Resources' liquidation of <br />its assets. A cap of $3 million in cash and services is written into the plan. Services provided <br />include the demolition and removal of metallic materials from the surface and from underground <br />by Machinery and Equipment Company, Resources salvage contractor, and the reclamation work <br />previously preformed by Resources or its sister corporation(s). As Resources assets continue to <br />be liquidated, funds are delivered to the Division. <br />2 <br />