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July 19, 2011 C-1 980-007/West Elk Mine TAK Inspection Topic Summary NOTE: Y=Inspected N=Not Inspected R=Comments Noted V=Violation Issued NA=Not Applicable N -Air Resource Protection R -Roads N -Availability of Records R -Reclamation Success R -Backfill&Grading R -Revegetation N -Excess Spoil and Dev.Waste R - Subsidence N -Explosives N -Slides and Other Damage R -Fish&Wildlife N - Support Facilities On-site R -Hydrologic Balance Y - Signs and Markers N -Gen. Compliance With Mine Plan NA - Support Facilities Not On-site NA -Other NA - Special Categories Of Mining N -Processing Waste R -Topsoil COMMENTS This was a regular partial monthly inspection and a partial Phase I bond release inspection of the West Elk Mine. Tom Kaldenbach of DRMS conducted the inspection. Ryan Sweetwater of Arch Coal Company represented the operator. Mike Ward,the operator's consultant also went along on the inspection. The U.S. Forest Service was represented on the inspection by Dan Gray on the first day of the inspection, and by Ryan Taylor on the morning of the second day of the inspection. The Division had previously notified the Office of Surface Mining of the bond release inspection,but they could not attend(email dated 6/27/2011 from Elizabeth Shaeffer of OSM to Tom Kaldenbach). Selected photographs taken during the inspection are attached to the end of this report. With the operator's consent,this report was issued from the Denver office of DBMS. The bond release inspection was conducted in accordance with Rule 3.03.2(2). The bond release inspection was conducted in response to the operator's filing of a partial Phase I bond release application(SL-03)which the DRMS received May 16,2011 and found complete on July 11, 2011,after receiving the operator's proof of publication of their notice in the Delta County Independent for four consecutive weeks. SL-03 requests Phase I release for wellbore sealing,backfilling, grading,and drainage establishment on approximately 48 acres(the "bond release area"). The amount of bond applicable to the bond release area has not yet been determined. The bond release area is composed of methane drainage well pads located above B-seam panels 14 through 24, and their associated access roads . Table l in the SL-3 bond release application identifies approximately 55 individual reclaimed sites in the bond release area. The pads and roads are located in four general areas: Sylvester Gulch,West Flatiron,Long Draw,and Deep Creek. Most of the bond release area is on U.S. Forest Service land. Arch Land, an entity associated with the mine operator, owns the land in the Sylvester Gulch portion of the bond release area. Development of MDWs and associated roads in the bond release area were approved in a series of MRs and TRs submitted over a period of several years. The reclamation plan for a specific group of MDWs and associated roads Number of Partial Inspection this Fiscal Year, ending 6/30/12: 1 Number of Complete Inspections this Fiscal Year: 0 Page 2 of 11