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0 <br />SENAFCA <br />cow Con*wny <br />Seneca Coal Company <br />October 13, 2008 <br />Grassy Creek Holding Company, LLC <br />P.O. Box 774406 <br />Steamboat Springs, CO 80477 <br />Dear Sirs: <br />Seneca Coal Company, 37796 Routt County Road 53, P.O. Box 670, Hayden, Colorado 81639, (CDRMS <br />Permit No. C-80-005, approved September 23, 1981) is requesting release of Phase I bond liability on <br />135.3 reclaimed acres of its total 3,457.0 acres currently within the permit boundary at the Seneca II <br />Mine. The Seneca 11 Mine is located approximately nine (9) miles southeast of Hayden, Colorado. The <br />specific area (135.3 acres) to which this bond release request applies is located within the following: <br />TSN, R87W - Sections 1, 11, and 12 TSN, R86W - Section 6 <br />All west of the 6`}' Principal Meridian, totaling approximately 135.3 acres. The USGS 7.5 Minute <br />Quadrangle Maps for Milner and Mt. Harris contain the described affected area. <br />A surety bond in the amount of $7,183,489 is currently in place of which $197,692 is being requested for <br />release. Pursuant to Rule 3.03.1, a permittee may request Phase I Bond release upon successful <br />completion of backfilling, regrading and drainage control in accordance with the approved reclamation <br />plan. The approved reclamation plan can be reviewed in its entirety in the Seneca II Mine Permit <br />Application Package located in the Hayden Public Library, Hayden, Colorado. <br />The Phase I reclamation activities have resulted in a stable landform in compliance with the approved <br />conditions in the Colorado Division of Reclamation, Mining and Safety (DRMS) Permit No. C-80-005. <br />T'he following is a brief summary of the regulatory bond release activities that have been completed. <br />• May 22, 2006 - SCC submitted a Phase I Bond Release Application for 2,247.7 acres of the total <br />2,299.3 acres disturbed. <br />• December 27, 2006 - DRMS issued a Proposed Decision and Findings of Compliance that released <br />SCC from Phase I liabilityin the amount of $3,679,464 on 2,054.5 acres. <br />• June 27, 2007 - SCC submitted an application for full bond release on 259.1 acres of Pre-Law <br />reclaimed lands. <br />• November 29, 2007 - DRMS issued a Proposed Decision and Findings of Compliance that released <br />SCC from total reclamation liability in the amount of $871,645 on 257.7 acres. <br />• • May 9, 2008 - SCC submitted a Phase II Bond Release Application for 1,793.5 acres. "The Proposed <br />Decision and Findings of Compliance have yet been released <br />Seneca Coal Company • P.O. Box 670 • Hayden, Colorado 81639 <br />Telephone (970) 276-5219 • FAX (970) 276-5222