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November 30, 2004 Colowyo Coal Company L.P. 5731 State Highway 13 Meeker, CO 81641 Colowyo Coal Mine Complete, oversight inspection October 25, 26, & 27, 2004 Participants: Kurt Blunt, Colowyo Crellin Scott, Colowyo Byron Walker, Colorado Division of Minerals and Geology (DMG) Henry Austin, Office of Surface Mining (OSM) I participated in a complete, oversight inspection as indicated above. This mine was chosen by the DMG-OSM Oversight Team for inspection during the 2005 evaluation cycle. The primary purpose of this inspection was to evaluate offsite impacts. No offsite impacts were identified as a result of this inspection. The Oversight Team will discuss a reported NPDES exceedence for settleable solids at NPDES outfa11007-Prospect Pond, with respect to a potential offsite impact. Weather conditions were cloudy with rain & snow shower mix in the area. Ground conditions were wet to saturated in some locations due to recent snowmelt. Mr. Walker briefed us on the nature of the inspection, and discussed a plan to see all areas of interest. We began the inspection on October 25 (afternoon) & 26 with field stops, observations, and discussions at the following locations: We discussed the approved raptor study-mitigation proposals (modifications to power poles, etc.) that are currently scheduled to be completed by the end of the 2004 calendar year. Stop at the East Pit /final cut highwall; the highwall miner will be operating here next. There was a highwall slough that the dragline was working on in preparation for the highwall miner work scheduled in this pit. Coal removal is completed in Section 16 area (State land), and Section 16 has an approved contemporaneous grading variance to facilitate possible mining development in the proposed South Taylor Pit. Colowyo is currently looking at several options for future mining development in South Taylor, the Collom Area, and opportunities possibly combining surface contour mining to create additional access benches for highwall miner utilization. Also a possibility of a Lower Wilson Creek. underground room and pillar mine development in the future. The Sec. 16 sediment pond was inspected and water level was approx. 1 foot below the principal discharge elevation. The topsoil stockpile at Sec. 16 is scheduled for furrowing and seeding this Fall. Stop at the topsoil removal azea south of the West Pit and adjacent to the new power station location, and topsoil removal activities have concluded here for this year. Removal activity appears to be in compliance and this removal area represents what will be the farthest advance (final cut area) planned for the West Pit. There are approx. 6 years of mining remaining in the West Pit as currently configured.