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Seneca Coal Company • SEcoaa comps~r • June 2, 2006 Cross Mountain Ranch Ltd. Partnership Go Transcontinental Corporation P.O. Box 458 Santa Barbara, CA 93102 RE: Seneca II-W Mine Phase I Bond Release Application To Whom It May Concern: Seneca Coal Company, 36600 Routt County Road 27, P.O. Bog 670, Hayden, Colorado 81639, is requesting release of Phase I bond liability on 761.2 reclaimed acres of its total 4,093.0 acres currently within the pemrit boundary at the Seneca II-W Mine (CDMG Permit No. G82-057, oppmved December 31, 1985). A surety bond in the amount of $9,707,373 is currently in place of which $2,329,115 ate being requested foz release. Pursuant to Rule 3.03.1, a pemuttee may request Phase I Bond release upon successful completion of backfilling, regrading and drainage control in accordance with the approved reclamation plan. Those portions of the mine for which Phase I bond release is requested were backfdled and graded from the beginning of mining, in 1990, through 2005 in accordance with the Colorado Division of Minerals and Geology (CDMG) rules and regulations. The approved reclamation plan can be reviewed in its entirety in the Seneca II-W Mine Permit Application Package located in the Hayden Public Library, Hayden, Colorado. All affected lands within Seneca II-W Mine fall within the pem~arrent program category. For the purposes of this Phase I Bond Release request, the lean "reclaimed" means those disturbed/mined areas where successful completion of backfilling, regrading and drainage control, in accordance with the approved reclamation plan, has been completed. The Phase I reclamation activities have produced a stable ]andform m compliance with the approved conditions in the CDMG Pem~it No. C-82-057 The following is a brief summary of the Phase I reclamation that has been completed. Backfilling and grading was conducted from 1990 through 2005 and was generally completed within 180 days following coal removal and was generally within two (2) spoil ridges behind dte active pit. The majority of the grading work was performed with dozers and scrapers. In some cases the major backfilling was done with scrapers and draglines. All areas affected by the surface mining operations, except as specifically exempted by the CDMG, wen: regraded on a timely basis to a stable configuration that conforms with the approved postmining land use (livestock grazing and w>Zdlife habitat). For the most part, grading was done along contour to also minimize erosion. Any time operations were conducted on steep slopes that could present safety concerns to the operators, grading was done. in a'direction other than parallel to contour. Exhibit C in the Phase I Bond Release application provides representative cross-sections showing final topography configuration. Amore detailed discussion of the overall mining and reclamation can be found in the Seneca II-W Mine Pemut Application, specifically Tab 12, Operation Plan and Tab 20, Back511ing and Grading. Included in the postmine regrading operation was the construction of small swales and hummocks to minimize erosion and to conserve soil moisture and to promote revegetation. Small stock tanks aze also utilized in the postmine grading operations to minimize erosion and to provide water for livestock and wildlife. The locations of these stock ponds are shown on Exhibit B in the Phase I Bond Release application. The designs and certified as-bunts for the permanent stock ponds can be reviewed in the Seneca II-W Mine Permit Application Tab 13, Facilities. • Seneca Coal Company • P.O. Box 670 • Hayden, Colorado 81839 Telephone (970) 276-3707 • FAX (970) 276-3014