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Surface Water Resources -The project azea is lies within the upper Yampa River watershed, and both the Yampa and Williams Fork Rivers flow through the area. The Williams Fork River, which originates in the western portion of the Dunkley and Beaver Flattops to the south, flows northwazd through the property, j oining the Yampa River on the property at the southern margin of Big Bottom. The Yampa River originates in the eastern portion of the Dunkley Flattops and flows north toward Steamboat, west through Steamboat and Craig, and then turns south, through the property before again fuming west towazd its confluence with the Green River neaz Dinosaw, Colorado. Both the Williams Fork and Yampa Rivers are dominated by flows from snowmelt runoff within the upper reaches of their watersheds. Several small unnamed ephemeral watersheds within the project azea, which typically flow only in response to spring snowmelt and thunderstorm runoff, aze tributary to either the Williams Fork or the Yampa Rivers. The proposed exploration drilling wil] be conducted so as not to adversely impact any of the potentially affected drainages. Ground Water Resources -Groundwater occurrence within the project azea is associated with the sandstones and coal units of the Des and Williams Fork formations and the alluvial/colluvial deposits of the Williams Fork and Yampa Rivers. Permeabilities and water yields may vary significantly depending on localized conditions, however, they are generally low for both the bedrock and alluvial/colluvial units unless influenced by secondary permeabilities associated with faulting and fracturing. Groundwater rechazge occurs in the uplands of the Williams Fork Mountains to the south. Groundwater movement is generally down-dip to the north-northwest along the plunge of the Williams Fork Anticline and Big Bottom Syncline. The proposed exploration activities will avoid azea drainage channels, and so will not affect alluvial/colluvial aquifers. BTU-EC anticipates that exploration activities may encounter some groundwater and will address potential discharge through appropriate operational controls during drilling and effective plugging and sealing on completion of drilling and sampling activities. Soils -Soils within the project azea aze formed primarily from weathered Fine-grained sandstone, siltstone, and shale. The dominant soils aze shallow to moderately-deep, well-drained, and have a textural classification of loam to fine-sandy-loam. Some aeeas of potentially unstable soils exist. Ve etg ation -The project azea is dominated by distwbed and reclaimed lands, which have been reclaimed as rangeland for grazing use. Reclaimed vegetation is primarily a mixed grass community composed mainly of native grass species, with some non-native grasses and both planted and volunteer shrubs. Other distwbed lands are utilized as improved pastweland and cropland, with mixed wheat grasses for livestock grazing and dryland hay. Undistwbed aeeas aze typically either a big sagebrush community (uplands) or a cottonwood/willow community (drainage lowlands). No TES plant species have been identified as occurring within the proposed project area. Access and locations for the proposed exploration activities have been layed-out to utilize existing access roads and two-tracks and previously distwbed aeeas to the extent feasible, therefore, the proposed exploration activities should not significantly impact existing vegetation communities. Temporary impacts to cropping or grazing activities may occw and will be addressed, to the extent feasible, by coordinated scheduling and surface damage agreements with surface lessees. Wildlife - Pinon juniper-sagebrush in the general project vicinity provide good yeaz-round habitat for deer, elk, and other lazge mammals. Within the project and immediately adjacent areas, significant wildlife habitation and use aze limited primarily to mule deer, although some elk and pronghorn antelope aze occasionally sighted as they move through and use the azea on a temporary basis. The dominant sandstone cliffs provide nest sites for raptors and other birds, and migratory birds aze seasonal residents of the neazby Big Bottom azea. No TES animal species aze known to occw in the project area. As part of the required consultation process, BTU-EC has contacted the Colorado Division of Wildlife (CDOW) for wildlife review, and the CDOW will review this exploration plan and provide necessary cleazances. It is not anticipated that the proposed exploration activities will negatively impact existing wildlife species or populations. G:\Environmental\EXPLORATION WORK\EXPLR 2005-2006 EMPIRE12006 Empire NOI Appl Form.doc Page 9 of 15