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STATE OF COLORADO DIVISION OF MINERALS AND GEOLOGY Department of Natural Resources 1313 Sherman St., Room 215 Denver, Colorado 80203 Phone: (303) 866-3567 FAX: (303) 832-8106 February 3, 2003 DIVISION OF MINERALS GEOLOGY RECLAMATION MINING•SAFETY Bill Owens Governor Jerry Koblitz Greg E. Walther Principal Executive Director Gre stone Develo ment Consultants Ronald W. Cattany Y P Acting Division Director 5231 South Quebec Street Greenwood Village, CO 80111 RE: 2000 and 2001 Annual Hydrology Report Review, Lorencito Canyon Mine, #C- 96-084 Mr. Koblitz: The Division of Minerals and Geology has completed review of the 2000 and 2001 Annual Hydrology Reports for the Lorencito Canyon mine. After initial approval in 1997, the mine delayed start-up of operations until October 2001. The original hydrologic monitoring plan was designed for a combination of surface and underground mining over a significant portion of the 17,000 acre permit area. Monitoring commenced under this original plan and continued until the operator requested a reduction in frequency of monitoring approved in early 1999. Subsequently, as a result of a modified mine plan as part of PR-01, the mine proposed a more limited hydrologic monitoring plan based on this more conservative mine plan the focused exclusively on surface mining activities in the Jeff Canyon area. Ground water pumping due to coal bed methane production and subsequent discharge of this water to the surface water system has altered both the surface and underground hydrologic regime since initial baseline data collection in 1996. No mining activities occurred until October 2001. This alteration in the hydrologic system continued until the modified mine plan under PR-01 was reviewed and approved. Therefore, March 2001 data, as reported in the 2000 Annual Hydrology Report, is the most representative pre- mine data for the stations currently part of the approved hydrologic monitoring program. Other monitoring stations remain as originally approved but are not currently part of the approved monitoring program. The baseline data collected over the period 1996-2001 is suspect with regard to its representation of pre-mine conditions regarding coal mining activities.