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Response: In view of current and projected future coal market conditions, Peabody Energy is evaluating several of our Northwest Colorado properties (additional reserves for Foidel Creek, and existing and • potential reserves for Empire and Big Elk) as potential sources of coal reserves for incremental and/or replacement production. If coal markets remain strong, and there is reasonable potential to secure favorable coal supply contracts, any or a combination of the coal reserves currently being evaluated could be developed and put into production in the next 2-10 years. Any decision to proceed with new development would have to be based on a number of factors including land position/constraints, e~nvironmenta] considerations and permitting requirements, and technical and economic feasibility. I8. RAG-EC/BTU-Empire received approval to leave some mining equipment underground in the Mine No. 6 workings (MR-42). Some of the equipment left undergrourul consists of roof support shields. RAG-EC/BTU-Empire has stated that hydraulic fluid from the shields was drained and disposed of properly. Please provide proof of disposal of the hydraulic fluid. Response: Empire has been unable to locate written documentation of disposal of the longwall emulsion, however, the mine closure contract specifies that the longwall emulsion will be drained from the shields and removed from the mine, and phone contacts with the contractor (Rocky Mountain Miners) responsible for mine closure and sealing have confirmed that the longwall emulsion was drained from the shields that were left underground, to steel drums, and that the drums were subsequently brought to the surface and removed from the mine-site. Subsequent monitoring has not detected any petroleum residuals in the groundwater. The apparent concern relative to potential groundwater contamination is unwarranted for several reasons, and is not relevant ro the requested liability release: • 1) Longwall emulsion was drained from the equipment and removed from the mine (as described) 2) Even if the emulsion had not been drained and removed, it would not pose a significant risk relative to the potential for groundwater contamination. The fluid drained from the longwall shields was an emulsion consisting of 96 to 98 percent water and 2 to 4 percent Solcenic concentrate, which is non-toxic and up to 70 percent biodegradable. The quantity of longwall emulsion in the shields was negligible relative to the calculated total volume of water (approximately 19,300 acre-feet) that would be contained in the Hooded mine workings following completion of mining. 3) The longwall shields remaining underground are in the E-Seam in the NE'/a, NE'/a, Section 5, TSN, R94W, approximately 2 miles east of the proposed liability release area and 300' lower in elevation 19. A portion of a rail line overlies the 3'd Soutlz main. TJae Eagle Mine Complex perneit provides no subsidence monitoring or mitigation plmr for the rail line (Rule 4.20.2). Please revise the Eagle Mine Complex permit to provide a subsidence mitigation plan for structures overlying underground workings that could be affected by surface sttbsitlence. Stnectaeres that need to be included in this plan include the rail line that overlies the 3.d South rnain, the cell tower, the rail road communications structure located adjacent to the cell tower, and the access roads that overlie the workings. Response: The effects of historic mining on the railroad line are not addressed for several reasons: 1) The potential for subsidence of the rail-line is negligible given that the 3`a South Mains are limited to 3-entries, and barrier and chain pillars were established and maintained to protect these main entries. This approach is a recognized and accepted method of subsidence control and is effective in preventing short- or long-term subsidence. Liability Release Response - No. 3 2 12/07/05