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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 />