Privileged & Confidential 
Attorney - Client Communication

I just spoke with Mr. Charles de Saillan, Asst. General Counsel for the NMED, 
concerning the referenced Compliance Order.  Apparently the NMED mailed out 
60 of these orders last week.  The NM legislature has adopted a statute of 
limitations under the NM Air Quality Act and the NMED was acting to attempt 
to foreclose the use of this defense.  (Dave - can Mary hunt this new 
legislation down??).

The language in the order assessing a $15,000 penalty per day of violation is 
standard language when the NMED has not assessed a specific figure.  It will 
be a couple of weeks before the NMED will be able to provide us a specific 
penalty.  We discussed settlement and the administrative hearing process.  A 
settlement meeting is not likely to take place soon due to the NMED's 
workload.  We need to have a number from the NMED before the settlement 
conference anyway. We will have to file the request to go to hearing no later 
tahn July 18th.  However, Charlie stated that if the respondent evidenced 
good faith to achieve as settlement the Secretary had the discretion to allow 
additional time to submit a full answer (where we provided all of the details 
of our defense.)

I told Charlie we would be organizing ourselves internally and that we would 
get back to him with some proposed dates for a settlement conference, a 
request for hearing and a request to extend the time in which to file an 
answer - preferably tied to after the settlement conference.

Let's see about dates and Dave or I will call the NMED and submit a letter 
with the three items above.  We want to make sure that the NMED has time 
before the end of the 30 day period to respond to our request for an 
extension on the answer.