_GENERAL DOCUMENTS - C1981017 (234)

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MEMORANDUM, RE : POST-MINING USES IN COAL BASIN November 3 , 1997 The U. S . Forest Service (LSFS) is in the process of acquiring the remainder of over 6 , 000 acres of land in Coal Basin, previously owned by Mid-Continent Resources, Inc . , and used in connection with it' s coal mining operation. Various suggestions have been made to the Forest Service as to the post- mining uses to be made of the property and the Forest Service has promised careful study with public input on such uses . Primarily uses considered focus on livestock grazing, wildlife habitat, and recreation. With the magnificent scenery, wildlife, and other attractions, the Coal Basin area presents an outstanding recreational opportunity for regulated public use subject to concerns expressed by the Forest Service and generally accepted by those familiar with the property. Primarily the problem relates to a lack of funding in that the Forest Service does not have money available to assume responsibility for additional trails, roads, parking areas, and the like . There is at this time a unique opportunity to solve this problem by utilization of part of the money allocated for Coal Basin reclamation to post-mining uses as is discussed below. Mid-Continent Resources, Inc . (MCR) posted a $3 , 000, 000 bond to assure reclamation in accordance with a Plan approved by the various governmental agencies including the Forest Service and the Mined Land Reclamation Division of the State of Colorado, now the Division of Minerals and Geology (DMG) . Funding has been accomplished by liquidation of the surety on this Bond, supplemented by an allocation of proceeds from sale of MCR assets with an allocation to reclamation on a priority basis made possible by subordination of the bankruptcy claims of the senior creditors . The provision of the reclamation statutes and of the Bankruptcy Liquidation Plan as approved by the United States Bankruptcy Court provide in substance that an amount up to