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October 20, 2009 <br />Seneca Coal Company, LLC (SCC) <br />P.O Box: 670 <br />Hayden, CO 81639 <br />Seneca II Mine (Permit No. C-1980-005) <br />Phase I bond release inspection <br />July 14, 2009 <br />Participants: <br />Roy Karo, SCC <br />Ryan Costa, SCC Intern <br />Scott Belden, Powder River Coal, LLC <br />Ed and Frank Camilleti (grazing leaseholders) <br />Dan Mathews, Colorado Division of Reclamation, Mining, and Safety (DRMS) <br />Jennifer Maiolo, USDI/Bureau of Land Management (Craig, CO) <br />Howard Strand, USDI/Office of Surface Mining (OSM) <br />I participated in a Phase I bond release inspection for 135.3 acres proposed of the Seneca II Mine <br />reclaimed areas as indicated above. Federal coal was mined at the Seneca II Mine, and OSM is a <br />co-payee on the reclamation surety bond. DRMS administers the bond release process in part <br />through the State- Federal Cooperative Agreement found at 30 CFR, Part 906.30. Weather <br />conditions were hot and dry, and ground conditions were dry throughout the mine. <br />The application and subsequent correspondence in the record document that SCC provided <br />notifications of the bond release inspection as required by Colorado Rule 3, Performance Bond <br />Requirements. These notifications included the surface and mineral owners of the permit area <br />proposed for release, surface landowners adjacent to the permit area, local, State, and Federal <br />governmental agencies, utility companies, and the public at large. The BLM, OSM, and <br />company representatives chose to participate in the inspection. The grazing leaseholders chose <br />not to take part in the inspection and departed following the pre-inspection office visit. <br />Prior to the inspection I reviewed the bond release application dated October 13, 2008. Mr. <br />Mathews began the inspection on the morning of July 14th by orienting the participants to the <br />inspection protocol including the requirements of Colorado Rule 3, Performance Bond <br />Requirements, and the Colorado Guideline Regarding Selected Coal Mine Bond Release Issues <br />dated April 18, 1995. Mr. Mathews also explained the methodology used to inspect the areas <br />proposed for release. The proposed release (approximating 135.3 reclaimed acres of the total <br />2,295.3 acres of disturbance) on the Seneca II Mine permit includes the East Wadge Pit <br />reclamation area (125.3 acres), which was excluded from Phase I bond release during an October <br />2006 inspection and remediated in 2007, as well as the Solid Waste Disposal Facility (9.5 acres) <br />that was reclaimed in 2007/2008. During the pre-inspection office visit, we discussed <br />approximate original contour (AOC) restoration, large-scale stabilization, and surface water <br />runoff (erosion) control which are all reclamation requirements to be completed in accordance <br />with Colorado Rule 3 and the approved DRMS permit in order to secure Phase I bond release.