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III. COMMENTS -COMPLIANCE , Colowyo C-1981-019~~~ 7 August 2006 ~F/v " Pg 1 /6 Below are comments on the inspection. The comments include discussion of observations made during the inspection. Comments also describe any enforcement actions taken during the inspection and the facts or evidence supporting the enforcement action. This was a partial inspection of the Colowyo Mine conducted by Jim Stark of CDRMS. The inspection was conducted on the afternoon of 7 August 2006, all day on 8 August 2006 and the early morning of 9 August 2006. Tony Tennyson and Matt Guptill of CCC accompanied me on the inspection. Tay Tonoai, Kurtis Blunt and Tom Peterson of CCC were present at various times during the inspection to discuss ongoing and future mining permitting and bond release projects. The mine was actively mining coal and hauling coal to the loadout at the time of the inspection. A train was being loaded on the morning of 8 August 2006. The weather was warm and overcast and the ground was dry. During the early afternoon of 7 August and the morning of 8 August 2006 Tay Tono~i, Tony Tennyson, Kurtis Blunt and Tom Peterson and I discussed current and future permitting actions. On 3 July 2006 the Division received Permit Revision 02. PR-02 was called complete on 13 July 2006. PR-02 proposes to incorporate an additional 6,050 acres into the permit boundary and allow for mining in the South Taylor Creek area. The revision proposes mining up to 17 seams of coal and includes plans for highwall mining. The Division is currently completing its preliminary adequacy review of PR-02. There are still three outstanding Technical Revisions at the Colowyo Mine. Technical Revision 63 proposes a new post-mining topography for West Pit and the unreclaimed areas of the East Pit. Included with this revision are changes to the designs of the post-mining drainage channels. Technical Revision 64 proposes to suspend the quarterly monitoring requirements for the Streeter Fill and the Section 16 Fill (excess overburden stockpiles). Phase I and Phase II bond releases have been approved for both of these fills. Technical Revision 65 proposes expanding mining in the Section 16 Pit to the south, eventually meeting up with the proposed South Taylor Pit. We also discussed the next Technical Revision, TR-bb. TR-66 is an updated reclamation cost estimate based on the proposed post-mining topography in TR-63. The operator had the estimate package in-house and was reviewing it. While at the Colowyo Mine the operator hand-delivered the responses to Minor Revision 81 and additional maps for Technical Revision 63. Signs and Markers: -All of the necessary signs (including mine ID signs, disturbed boundary signs, stream buffer signs and blasting signs) were in place as required and contained all of the necessary information. Permit marker signs were up at the three ponds along Colorado Highway 13 (Streeter, Gulch A and Prospect) and blasting notice signs were periodically placed on the fence along the highway. The operator has stream buffer signs along Taylor Creek west of the West Pit.