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the DBMS recommended that SCC revise the drainage design for this area by incorporating two additional channels and also indicated in this report that the diversion ditch above the shrub establishmenUelk fence be incorporated into the drainage design as a permanent post mine feature (see inspection report issued 07/02/04). The drainage control was redesigned with Technical Revision No. 36 (TR-36) including a meandering flow path design for Post-Mine Channels 8a and 86 and this was subsequently approved in January 2005. Following 2006 spring runoff, SCC has done substantial remediation grading and roughening above the junction of PM-8b upper and PM-8b lower and has constructed a new diversion from the junction down to PM-8. Based on the observations made during the Phase I inspection it is appazent that the design is no longer functional. The East Wadge Pit area beginning above the shrub plot study azea all the way down to the South Road will need to be reevaluated to provide stable slopes and effective post-mine drainage control. One problem that has been noted in the past is that the temporary diversions constructed to divert water away for the shrub plot have concentrated the flow of water elsewhere resulting in significant gully formation. SCC will need to reevaluate the surface water runoffcontrol plan for the entire location described above. This azea will require reconstruction grading. If major disturbance of the azea is caused by the regrading work, SCC should reseed the area. SCC was notified during the Phase I bond release inspection that the East Wadge Pit azea is not functional or stable, and therefore not eligible for Phase I bond release. Alt of the interim-law lands were inspected in conjunction with the permanent program areas during the bond release inspection on August 7 through 10, 2006. These lands have also been routinely inspected throughout the permanent program period. With exception of minor maintenance items discussed in the Phase I bond release inspection report dated August 24, 2006 regazding drainage reestablishment for Post-Mine Channels PM-10 and PM-22, no other problems were identified on the interim-law lands during the Phase I inspection. All of the interim-law lands aze eligible for Phase I bond release. Pre-Law Area The pre-law azeas were inspected on August 11, 2006 by Sandra Brown and Mike Boulay of the DRMS. Roy Karo of SCC and Jay James of JEC, Inc. accompanied the DRMS during this portion of the Phase I bond release. The lower portions of the pre-law azeas in the northern part of the permit azea east and southeast of the Wadge Impoundment all look good with a dense vegetative cover. With the exception of the maintenance items discussed in the Phase I bond release inspection report for the PECOCO Pond and Post-Mine Channels PM-2 and PM-23, the pre-law lands southeast of the PECOCO Pond were also stable and well vegetated. No other items of concern were noted for these pre-law land locations. ' There were problems identified with regazd to backfilling and grading and drainage reestablishment in the pre-law azea referred to as the old Wolf Creek Pit. As described below in Section IV of this document, approximately 67.4 acres will be excluded from Phase I bond release. This upper Wolf Creek azea is located in the northeast portion of the permit area designated by yellow shading on Exhibit B with a coal removal limit of 8/3/77. It can be accessed by the Pre-Law Road on the north I4