between the DEQand the BLM that was prepared in conjunction with the BLM's June 

 Action Memorandum lists the obligations of both parties to maintain the water 

 capture and treatment facilities at the mines. One provision of the agreement states 

 that the "BLM will provide supplemental funding to DEQ, to the extent allowed in 

 BLM's budgeting process, in order to maintain operation of the water treatment plants 

 after the annual surety payment has been expended". Either party may terminate the 

 MOU following a 60-day notice. The additional BLM funds are subject to congressional 

 funding of BLM's budget. Still, this is an encouraging indication of BLM's willingness to 

 provide continuing financial assistance for short-term water treatment. 



in the absence of any additional funding, the DEQ's contractor currently estimates 

 that there will be a $12.1 million shortage in what will be needed over the next 13 

 years to cover the costs of operating and maintaining the water treatment plants. This 

 translates to a net present value of approximately $7.45 million if the funds were 

 made available by January 2005 and invested at interest.^* Meanwhile, the DEQ has 

 applied to the DNRC for a third $300,000 RDG to help cover the shortages of operating 

 the water plants for approximately 3 years. 



The DEQ's contractor projects that it will cost $1.8 million to operate and maintain 

 the water treatment plants in the year 2017 given current operating costs. The costs 

 of operating the plants could increase or decrease over time, depending on the 

 amount of water that requires treatment based on precipitation and the success of 

 reclamation efforts and the inflationary costs of operation, repair, and maintenance. 

 Added to the cost of water treatment is the maintenance and operation of the 

 bioreactor water treatment process, which was not anticipated in the Consent Decree 

 and not bonded for by Pegasus. 



Perhaps more important in terms of budget shortfalls is the bond that is available for 

 long-term water treatment after June 30, 2017. Pegasus was required to establish a 

 trust fund that would pay for long-term water treatment defined in the SEIS until the 

 year 2080. The difficulty of predicting needs, technology, and financing that far into 

 the future or beyond are described in detail in the SEIS. A bond package of zero 

 coupon bonds was purchased by Pegasus and by the DEQ following the Pegasus 

 bankruptcy to provide a long-term trust reserve estimated to be worth approximately 

 $14.8 million by the year 2017. The DEQand its consultants have calculated that given 

 the current costs of operating the water treatment plants, the $14.8 million is about 

 $11.1 million dollars short of what may be needed to pay for long-term water 

 treatment if the funds were made available by January 2005 and invested at 6% 



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