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II. PROCEDURES AND SUMMARY OF THE REVIEW PROCESS <br />The Colowyo Coal Company (Colowyo) applied for a Phase I Bond Release for 494.20 disturbed <br />acres, and a Phase II Bond Release for 432.70 disturbed acres, as shown on Exhibits 1 and 2 of the <br />SL-04 application, respectively. The mine area is located in Moffat and Rio Blanco Counties, <br />Colorado. The bond release areas are located in the Mine's East Pit, West Pit and Section 16 Pit <br />areas, in Moffat County, in portions of Township 3 North, Range 93 West (T3N R93W) of the 6th <br />Principal Meridian, Sections 3, 4, 10, 11 and 16. The permit area can be found on the USGS <br />Quadrangle 7.5 Minute Series Maps of Axial and Nine Mile Gap. The permit area and surface <br />ownership can be found on Colowyo Permit Map 1 and the coal ownership can be found on <br />Colowyo Permit Map 2. <br />Background <br />The Colowyo Mine is located in northwest Colorado, approximately 25 miles north of the town <br />of Meeker, CO and 25 miles south of the town of Craig, CO in Moffat and Rio Blanco Counties <br />off of Colorado State Highway 13. The total permit area encompasses 12,250.95 acres. <br />The East Pit, West Pit and Section 16 Pit mining sites lie just west of the northward flowing <br />Goodspring (also referred to as Good Spring) Creek, which is paralleled by Colorado Highway <br />13. The area is a gently sloping upland ranging from about 7,640 feet near the southwest corner <br />to 6,560 feet near the northeast corner of the permit area. Valleys that cut into the upland surface <br />are generally narrow, V-shaped, and about 250 to 500 feet deep. The topographic surface north <br />of the East Pit, West Pit and Section 16 Pit mining sites is dominated by two ridges about two <br />miles long, trending north-northeast, bounded by Goodspring, Taylor and Wilson Creeks. <br />Mining operations began in 1976 with the East Pit, a multi-seam coal operation that continued to <br />move in a southerly direction. Eight coal seams (Y, X, A, B, C, D, E, F) were mined from the <br />East Pit, ranging in thickness from two to fifteen feet. The East Pit is nearly 6,000 feet from east <br />to west (width), 1,000 feet in breadth (highwall to highwall), and 450 feet deep. Due to the <br />number of coal seams, immense size of the pit, and manpower and equipment employed, pit <br />progression was slow, with additional disturbances of approximately 40 to 50 acres per year. The <br />East Pit reached a steady state where acreage disturbed approximately equals acreage reclaimed <br />in any given year. However, reclamation of the East Pit disturbed areas was modified with the <br />placement of West Pit development excess spoil. Extraction of coal from the East Pit was <br />terminated in 2006. Currently the only ongoing operation in the East Pit is reclamation of the <br />final cut, including backfilling and grading of the pit and highwall reduction. <br />The still expanding, multi-seam West Pit is located to the west of the East Pit. The method of <br />operation utilized in, and the coal seams extracted from, the West Pit are the same as those of the <br />East Pit. The West Pit has approached the East Pit in overall size. Mining in the West Pit is <br />advancing from north to south, paralleling the movement of the adjacent East Pit. Projected life <br />of the West Pit is estimated to be until 2017, including potential highwall mining. <br />Proposed Decision and Findings of Compliance 2 May 2011 <br />Partial Phase I/II Bond Release SL-04 Page 2