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ST iMivtARY Current Operational Statu The McClane Canyon Mine is an active underground coal mining operation. The mine area encompasses 2,560 acres, of which 2,189.7 acres are projected to be affected by mining. Permitted surface disturbance is 9.5 acres. Coal is mined underground using room and pillar techniques. Maximum projected annual coal production is 600,000 tons,with a projected production of 300,000 tons per year through 2008. Permitting istnry Initial site development work at the McClane Canyon Mine (McClane) was conducted under a USGS approved exploration plan effective December, 1976. The Colorado Mined Land Reclamation Division (now Division of Minerals and Geology) issued a three year permanent regulatory program permit on April 6, 1982, for a 248 acre permit area. The existing access/haul road and the portal bench face-up developments were in place prior to issuance of the 1982 permit, and no topsoil had been salvaged from these areas. This permit was renewed on July 5, 1985, for an additional three year permit term. The mine was in temporary cessation from January 17, 1984 to November 17, 1988,.when coal production was resumed. On January 27, 1992, the permit was renewed for a five year term. The 1992 renewal incorporated a permit revision which added 2,312 acres to the permit area, and proposed construction of a haul road which would connect the McClane Canyon permit area to the adjacent Munger Canyon permit area, (both mines are operated by the same permittee). There were relatively brief periods of coal production between 1992 and 1999, but for much of this time the operation was in temporary cessation. On March 3, 1993, the Division approved a permit transfer from Salt Creek Mining Company to Grand Valley Coal Company (GVCC). On December 31, 1996, the Division approved a permit renewal(RN-04)for a new five year term, expiring July 6,2001. On August 17, 1999, the Division approved a permit transfer from GVCC to Lodestar Energy, Inc. (LEI). On December 1, 1999, operational status was officially changed from temporary cessation to active. LEI initiated coal extraction operations at the mine the week of February 21, 2000, and active operations have continued to the present time(March 2004). To date,coal produced at the mine since operations resumed in 2000 has been trucked to the Xcel Energy Cameo Power Plant near Palisade,Colorado. LEI filed for bankruptcy on March 30, 2001, and operated the mine for a period of time as a debtor in possession. In May 2003, certain LEI assets including the McClane Canyon operation were acquired via bankruptcy auction by Central Appalachia Mining, LLC (CAM). On June 26, 2003 the Division received an application for Succession of Operators (SO-3) to transfer the permit from LEI to CAM. The Division identified a number of adequacy issues during review of the SO-3 application. By the end of 2003, CAM had submitted an acceptable replacement bond, and all adequacy issues had been resolved, with the exception that all required right of entry documentation had not been provided. Specifically,the Bureau of Land Management(BLM)had not been able to approve the transfer of Federal Coal Leases COC-0125439, COC-0125515, and COC-0125516, due to delinquent lease royalty payments owed by LEI. These issues were resolved, and BLM approved assignment of the federal coal leases on 11/4/04(effective 12/1/(14). The Division issued a proposed decision approving the permit transfer to CAM on November 17, 2004. The transfer decision was final on December 17,2004. There have been only two enforcement actions issued for operations at McClane Canyon Mine since issuance of the current permit, in July 1997. NOV CV-99-006 was issued to Grand Valley Coal Company on June 28, 1999, for failure to perform quarterly water quality laboratory analyses. The NOV was properly abated,and was terminated on July 9, 1999. The assessed penalty was properly paid. NOV 3