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Mr. Timothy J. Flanagan <br />September 12, 2011 <br />Page 2 <br />The BIC has commenced construction work on the Boyd and Freeman headgate and ditch <br />to repair recent flood damage and to install the measuring and recording devices requested by the <br />State Engineer's Office and expects the work to be complete later this fall. This work is <br />designed in part to allow for the use of the 240 BIC shares in AI's annual substitute supply plans <br />consistent with AI's temporary rights to use the shares for this purpose. Greeley's purchase of <br />the shares required Greeley to pay 83 Joint Venture's portion of Company assessments for this <br />work. <br />Full Replacement of Evaporative Losses <br />As was acknowledged in AI's April 26, 2011 letter to the Divison of Reclamation, <br />Mining and Safety, the BIC shares only provide partial replacement of the planned evaporative <br />losses from the F- Street Pit. The AI letter suggests that the post reclamation consumptive use <br />will be approximately 168 acre -feet per year, the depletions associated with a 67 -acre water <br />surface. Moreover, the BIC shares would only be available as a replacement source during the <br />irrigation season. APs Plan indicates that additional augmentation water for the F- Street Pit will <br />be rented from Greeley. Greeley would be happy to discuss the possible rental of additional <br />replacement water to AI for this purpose. <br />Long -Term Water Augmentation Obligations <br />According to the Lease, 83 Joint Venture is responsible' for implementing and <br />complying with the requirements of any water augmentation plan following the termination of <br />the Lease. 83 Joint Venture is still the record owner of the land on which a pennanent <br />augmentation plan must be filed for the F- Street Pit. The conveyance of the water rights did not <br />include conveyance of the land and Greeley has no obligation to provide long -term augmentation <br />water for this property. In light of the fact that 83 Joint Venture conveyed the shares in lieu of <br />a sale for delinquent assessments, it will no longer have the shares available for partial long -term <br />coverage of evaporative losses from the F- Street Pit and will have to acquire other water rights to <br />meet this obligation. Again, Greeley acquired the shares subject to Al's temporary use of the <br />shares in its S \VSPs as described in the Lease. <br />Greeley would be happy to meet with you or your clients to discuss the use of the BIC <br />shares in AI's Plan or related matters. Please have your client contact Jim Hall, Water Resources <br />Manager, at (970) 336 -4039 to discuss any of these issues further. <br />Sincerely, <br />Katie L. Wiktor <br />Assistant City Attorney <br />cc: Eric Reckentine, Deputy Director <br />Jim Hall, Water Resources Manager <br />