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					OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT




              Annual Evaluation Summary Report

                            for the

                     Regulatory Program

                  Administered by the State




                              of




                      MISSISSIPPI



                             for




                    Evaluation Year 2006

                 July 1, 2005 to June 30, 2006




                          July 2006
                                EXECUTIVE SUMMARY

During the 2006 Evaluation Year (EY), the Office of Surface Mining (OSM), Birmingham
Field Office (BFO), conducted oversight evaluations of the Mississippi Department of
Environmental Quality (MDEQ), Office of Geology, the State coal mine regulatory
authority. The oversight studies focused on the success of Mississippi in meeting the Surface
Mining Control and Reclamation Act’s (SMCRA) goals for environmental protection of land
mined for coal. An evaluation plan was cooperatively developed by the BFO and the State to
tailor the oversight activities to the unique conditions of the state program. Through
oversight activities, the need for financial, technical, and other program assistance to the
State is identified and provided to strengthen its program.

In support of OSM’s national initiatives, the BFO conducted studies in the areas of off-site
impacts and customer service. OSM’s national initiative on reclamation success was not
reviewed because Mississippi has not processed any bond release actions since its first
mining permit was issued on August 25, 1998.

   •   The off-site impacts study demonstrated that no off-site impacts had occurred on the
       Red Hills Lignite Mine during the review period. No off-site impacts have been
       identified on the coal mining permit since mining commenced in 1998.

   •   To evaluate the effectiveness of Mississippi’s customer service, the BFO evaluated
       the Office of Geology’s public participation process required as part of the permit
       modification procedures. The modification involving the beneficial use of coal
       combustion by-products (CCBs) is the first modification to be processed by the
       program. Since the public review period did not end during EY 2006, the review will
       be completed in EY 2007. Several requirements were addressed during the year
       including notification of landowners, filing the modification at the county chancery
       court, and publishing notice of the modification in two local newspapers and a
       regional newspaper.

OSM conducted assistance activities as follows:

   •   The Mid-Continent Regional Office provided technical assistance on hydrology and
       soil issues relating to the modification to the permit for the beneficial use of CCBs on
       the mine site and the mid-term permit review.

   •   The BFO provided program assistance in the areas of permitting review processes,
       CCB beneficial use on the mine site, and the inspection and documentation of the
       mining and reclamation processes.

To assure that all written notifications and consultations for public participation are
conducted as required, the Office of Geology produced a guidance document that captures all
actions required by their regulations. An appendix to the guide was also developed that
identifies all agencies to be contacted including their addresses.
                                               i
The OSM Mid-Continent Regional Office (MCR) performed a review of the Office of
Geology’s drawdown and disbursement of Federal funds for the period September 1, 2004,
through April 30, 2006. The objectives of the review were to determine that the cash amount
of advances were not excessive and timed to immediate needs. The analysis determined that
the cash advances were limited to the amounts needed and were timed to immediate need.




                                TABLE OF CONTENTS


                                             ii
        Executive Summary ....................................................................................................... i


        Table of Contents......................................................................................................... iii


        List of Acronyms Used in Report ................................................................................ iv


I.      Introduction....................................................................................................................1


II.     Overview of Coal Mining Industry................................................................................1


III.    Overview of Public Participation in the Program..........................................................2


IV.     Major Accomplishments/Issues/Innovations.................................................................3


V.      Success in Achieving the Purposes of SMCRA ............................................................4

             A. Off-site Impacts .................................................................................................4

             B. Reclamation Success..........................................................................................4

             C. Customer Service ...............................................................................................4


 VI.    OSM Assistance.............................................................................................................5


 VII.   General Oversight Topic Reviews .................................................................................8


 Appendix A: Tabular Summary of Core Data to Characterize the Program


 Appendix B: State Comments on the Report and Responses to Comments




                                                                 iii
                    LIST OF ACRONYMS USED IN THE REPORT

BFO - Birmingham Field Office
CCBs - Coal Combustion By-Products
CHIA - Cumulative Hydrologic Impact Assessment
EY - Evaluation Year
FAM – Federal Assistance Manual
MCR – Mid-Continent Regional Office
MDEQ - Mississippi Department of Environmental Quality
MLMC - Mississippi Lignite Mining Company
OLW – Office of Land and Water
OPC - Office of Pollution Control
OSM - Office of Surface Mining Reclamation and Enforcement
PHC - Probable Hydrologic Consequences
RHGF - Red Hills Generating Facility
RHPP - Red Hills Power Project
SMCRA - Surface Mining Control and Reclamation Act
USFWS – U. S. Fish and Wildlife Service




                                           iv
I.    INTRODUCTION

      The Surface Mining Control and Reclamation Act of 1977 (SMCRA) created the Office
      of Surface Mining Reclamation and Enforcement (OSM) in the Department of the
      Interior. SMCRA provides authority to OSM to oversee the implementation of and
      provide Federal funding for State regulatory programs that have been approved by OSM
      as meeting the minimum standards specified by SMCRA. This report contains summary
      information regarding the Mississippi Regulatory Program and the effectiveness of the
      Mississippi Program in meeting the applicable purposes of SMCRA as specified in
      section 102. The Mississippi Department of Environmental Quality (MDEQ), Office of
      Geology, administers the program. This report covers the period of July 1, 2005, to June
      30, 2006. Detailed background information and comprehensive reports for the program
      elements evaluated during the period are available for review and copying at OSM’s
      Birmingham Field Office (BFO), 135 Gemini Circle, Suite 215, Homewood, AL 35209.

II.   OVERVIEW OF THE MISSISSIPPI COAL MINING INDUSTRY

      The State of Mississippi was one of the first States to be awarded primacy to regulate
      coal mining within its borders after passage of SMCRA in August 1977. For a number of
      years after primacy was awarded, no serious interest surfaced for mining the lignite
      deposits found in Mississippi. Exploratory drilling throughout the Mississippi lignite
      fields began in the mid-1970's and culminated in the issuance of a permit to mine lignite
      in Choctaw County in August 1998.

      Coal is present in Mississippi in the form of lignite, a brownish black coal that is
      intermediate between peat and bituminous coal. The lignite found in Mississippi is part
      of a band of lignite that extends from south Texas through Louisiana, Arkansas,
      Tennessee, Mississippi, and into central Alabama. Essentially all of the economically
      significant lignite in Mississippi is found in the Eocene Wilcox and Claiborne groups,
      which come into the State just east of Memphis, Tennessee, and proceed through the
      State in a shallow eastern-progressing curve, exiting into Alabama approximately
      midway down the State. Typically, lignite beds or seams that can be mined for economic
      purposes range from two to nine feet in thickness. The 1978 estimates of the total lignite
      resources for the State in lignite beds two feet thick or greater and less than 200 feet in
      depth were 5 billion tons. Mississippi lignite resources equal about 13 percent of the
      total U.S. lignite resources of 40 billion tons. For the foreseeable future, lignite will
      primarily be used for the generation of electricity.

      The Red Hills Power Project (RHPP) in Choctaw County developed as a result of an
      initiative by the Tennessee Valley Authority to explore options for additional power
      generation. The generation facility, with a net output of 440 megawatts of electricity,
      was estimated to consume about 3 million tons per year of lignite from the Mississippi
      Lignite Mining Company (MLMC), Red Hills Lignite Mine. The lignite mine is located
      between the generation facility and the Natchez Trace Parkway near the town of
      Ackerman, Mississippi. It is projected that over the 30-year life of the 5,809-acre mine,
                                               1
       about 4,700 acres will be disturbed; 1,400 acres by mine development activities and
       3,300 by lignite removal operations. The remaining 1,109 acres will be used for buffer
       zones.

       Mine development began in September 1998 with construction of access roads, mine
       support facilities, a lignite handling facility, temporary stream diversions, a stormwater
       runoff control pond, and sedimentation control ponds. Overburden removal began in
       1999 with actual lignite mining beginning in 2000. The power plant became fully
       operational on February 28, 2002. The mine plans to supply the RHPP with
       approximately 3.3 to 3.6 million tons of lignite per year through 2030.

       Of the 5,809 acres permitted, 3,625 acres are bonded. As of June 30, 2006, 1,921 acres
       of the Red Hills Lignite Mine had been disturbed. Lignite is being mined from six
       seams.

       Mississippi has a small inventory of abandoned lignite mines. Nine sites have been
       identified in five counties. All of the sites for which acreage was available were listed as
       less than one acre in size. Three of the sites involved the underground mining of lignite.
       The lignite was typically used for blacksmithing and home heating.

III.   OVERVIEW OF THE PUBLIC PARTICIPATION OPPORTUNITIES IN THE
       OVERSIGHT PROCESS AND THE STATE PROGRAM

       Opportunities for public participation occur at various points throughout the Mississippi
       regulatory program. They include the ability of the public:

       •   To request that areas be designated as unsuitable for mining;
       •   Notification by advertisement of receipt of permit application;
       •   To review permit and modification applications;
       •   To request a formal hearing concerning actions of the Mississippi Environmental
           Quality Permit Board;
       •   To request an inspection of a mine site;
       •   To object to proposed bond releases;
       •   To initiate citizen suits; and
       •   To petition to initiate rulemaking.

       By letter dated April 20, 2005, the BFO sought public comment from four
       organizations/agencies on OSM’s 2006 evaluation year (EY) oversight process and the
       State regulatory program. These were the Mississippi Wildlife Federation, the Sierra
       Club, the National Park Service, and the U.S. Fish and Wildlife Service (USFWS). The
       four entities were requested to contact the BFO if they had any questions, issues or
       concerns that the BFO’s oversight studies could address. No responses were received.




                                                 2
IV.   MAJOR ACCOMPLISHMENTS/ISSUES/INNOVATIONS IN THE MISSISSIPPI
      PROGRAM

      Accomplishments:

      The State is implementing the coal mine regulatory program in an effective manner.
      Inspections were conducted as required, and conditions on the mine site were thoroughly
      documented. No violations of the Mississippi surface mining law or regulations were
      noted during the year.

      On September 2, 2003, the Director of MDEQ approved the limited use of 67,000 cubic
      yards of coal combustion by-products (CCBs) for stabilizing dragline benches, truck
      backfill areas, and haulroads at the Red Hills Mine. The current uses of CCBs and the
      amounts deposited on the permit exceed the scope and intent of the Director of MDEQ’s
      previously approved coal mine permit revision. The Office of Geology determined an
      amendment to the mining permit in the form of a modification was necessary to expand
      the use of CCBs at the mine. The modification necessitated change to the operations
      plan, submission of data and discussions on new probable hydrologic consequences
      (PHC), and the preparation of a cumulative hydrologic impact assessment (CHIA) by the
      State. The public participation process for the modification was begun in EY 2006 and
      should be completed by September 2006.

      The Office of Geology reached an agreement with MLMC to file quarterly reports
      incorporating aerial photography which shows: the limit of complete coal removal and
      the beginning and end points of rough grading and backfilling. This will allow them to
      evaluate MLMC’s timeliness of reclamation as related to the mining operation.
      Contemporaneous reclamation is key in achieving the regulatory goal of on-the-ground
      success.

      Issues:

      Hurricane Katrina was the costliest and one of the deadliest hurricanes in the history of
      the United States. It ranked as the sixth strongest Atlantic hurricane ever recorded.
      Katrina made landfall as a Category 3 storm on the morning of August 29, 2006. The
      storm surge caused major or catastrophic damage along the coastline of Mississippi,
      including the cities of Biloxi and Gulfport. The hurricane lost strength inland near
      Jackson. Two-hundred and thirty-eight deaths in Mississippi were attributed to Katrina.
      Clean-up and reconstruction continues along Mississippi’s coast.

      Due to the location of the mine in northeast Mississippi, there was limited effect on coal
      production and related power plant production resulting from Hurricane Katrina. There
      were no significant impacts to the mining operations. Although the State Office was not
      operational immediately following the hurricane, there were no significant impacts to
      program operations.



                                               3
V.   SUCCESS IN ACHIEVING THE PURPOSES OF SMCRA AS DETERMINED BY
     MEASURING AND REPORTING END RESULTS

     To further the concept of reporting end results, the findings from performance standards
     and public participation evaluations are collected for a national perspective. For the
     majority of primacy States, these findings include descriptions of the number and extent
     of observed off-site impacts; the number of acres that have been mined, reclaimed and
     meet the bond release requirements for the various phases of reclamation; and the
     effectiveness of customer service provided by the State. Since there have been no
     requests for bond release by the MLMC, only the evaluations of off-site impacts and
     customer service apply. Individual topic reports are available in the BFO that provide
     additional details on how the following evaluations and measurements were conducted.

     A.     Off-site Impacts:

     OSM annually evaluates and reports on the effectiveness of State regulatory programs in
     protecting the environment and the public from off-site impacts resulting from surface
     coal mining and reclamation operations. Data are gathered nationwide in order to portray
     the on-the-ground success of State programs in preventing or minimizing off-site
     impacts.

     An off-site impact is defined as anything resulting from coal mining that causes a
     negative effect on resources (people, land, water, structures). The impact must also be
     regulated or controlled by the State regulatory program. The impact must be mining
     related and must occur outside the area authorized by the permit for conducting mining
     and reclamation activities.

     The BFO conducted two joint inspections of the mine site during EY 2006. No off-site
     impacts were identified during these inspections. No off-site impacts were noted on any
     of the 14 inspection reports prepared by the Office of Geology. No enforcement actions
     were issued by the Office of Geology during the evaluation period. The mine site in
     Mississippi was free of off-site impacts.

     B.     Reclamation Success:

     The company has not requested that any bonds be released since the start up of the mine.
     Therefore, no bond release actions were processed during the review period.

     C.     Customer Service:

     The Office of Geology is processing its first permit modification. Under Mississippi’s
     regulations, a permit modification requires public participation. The modification
     involves the beneficial use of CCBs at the Red Hills Mine to stabilize haul routes,
     dragline benches, and haul-back areas. Due to the complex issues associated with the use
     and disposal of CCBs on the mine site, the State determined the permit revision met the
     modification criteria.

                                             4
      Major steps in the public comment process include:

      •   The company places a copy of the application for the modification at the county
          chancery court.
      •   Public notice of the modification must be published in a local newspaper and a
          regional newspaper for four consecutive weeks. The modification advertisement is
          published in two local newspapers and the regional newspaper, The Jackson Clarion
          Ledger. The State’s notification is a dual notice(s) by Office of Pollution Control
          (OPC), described as coal ash beneficial use determination, and the Office of Geology
          (permit MS-002).
      •   The Office of Geology provides written notification to all entities specified in their
          regulations.
      •   Written objections from the public and other interested parties must be provided to
          the Permit Board within 30 days after the last publication of the required newspaper
          notice.
      •   A public hearing must be requested within 45 days after the last publication of the
          required newspaper notice. A public hearing will be held in Ackerman, Mississippi,
          if requested.
      •   Any comments received as a result of the public newspaper notices, the written
          notifications, and the public hearing, if held, are addressed by the Office of Geology.

      The Mississippi Lignite Mining Company provided written notices to the individual
      landowners whose land is located within the five year permitted area addressing the use
      of CCBs on the mine site. These notices were provided to the landowners prior to the
      public comment process. Any landowner comments will be addressed by the Office of
      Geology.

      Since the public review process was not completed during EY 2006, the BFO will
      complete the review in Evaluation Year 2007.

VI.   OSM ASSISTANCE

      The focus of OSM’s oversight role is on-the-ground reclamation success and end results
      rather than on processes. OSM’s role emphasizes assisting the State in improving its
      regulatory program by identifying program needs and offering financial, technical, and
      programmatic assistance as necessary to strengthen the State program. The BFO
      routinely provided information to Mississippi regarding new policy guidelines and
      procedures, as well as changes in existing guidelines and procedures. The following
      assistance activities were conducted during EY 2006:

      During EY 2005, the Office of Geology requested technical assistance with the review of
      a revision/modification to the current mining permit and with its upcoming mid-term
      permit review. Mississippi requested assistance in order to process the hydrology portion
      of the mid-term review addressing the PHC and preparation of the CHIA. In addition,
      assistance was requested to address the hydrology and soils issues related to the

                                               5
modification to the permit regarding the beneficial use of CCBs and the topsoil
substitution plan portion of the revision. The technical staff of the MCR initiated action
to provide the requested assistance and during EY 2006 provided the State with three
reports. The following information was provided to the State addressing the
revision/modification and the mid-term review:

Beneficial Use of Coal Ash

The MCR’s review found that the laboratory tests indicated the ash could potentially
release certain dissolved materials at concentrations of concern when the ash comes into
contact with water while on the surface or when buried. However, it was determined the
water will not easily move through the hardened ash deposits and those materials that
dissolve out of the ash would tend to be captured by the abundant clay particles in the
mine soils. The analysis of the available data suggested the continued use of ash should
not adversely affect local water resources.

The review identified concerns relating to hydrology and made recommendations for the
State to consider. These included:

   •   Requiring adjustments to methodologies used in the analysis of surface and
       ground water sampling and data reporting,
   •   Increase the number of constituents to be tested for water quality analysis,
   •   Installation of additional monitoring wells at the mine, and
   •   Increase sampling frequency to twice a year, and additional discussions on the
       locations and burial of the coal ash.

The MCR found the post mining land use should not be affected by the coal ash if a
minimum of ten feet of suitable cover material is placed over the ash. Planting of pine
trees is the major revegetation effort, and the rooting and growth of the trees should not
be inhibited with this cover requirement.

The Office of Geology adopted the MCR’s recommendations and discussed the
deficiencies with the mining company. The company is currently addressing the State’s
concerns and requirements.

The Office of Geology and the BFO continued to discuss approaches to monitoring CCB
use and disposal on the mine site. Currently, the permittee is restricted to the original
approvals for the beneficial use of CCBs until the permit modification, Modification 1, is
approved. A seven month extension was granted by MDEQ on the original use submittal
to allow for the MCR review and the State’s subsequent deficiency letters and replies
from MLMC. The time extension was granted to allow for MCR assistance. An
additional extension was given to cover the time required by regulations for the request
of a public hearing subsequent to public notice procedures. MLMC has disposed of
approximately 50 percent of the maximum approved annual CCB tonnage.

Topsoil Substitution Plan

                                         6
The mining company had previously submitted a topsoil substitution plan that included
overburden materials that were not acceptable as a topsoil substitute. The MCR made
the following recommendations from its review:

   •   Substitution of selected oxidized overburden materials were acceptable but no
       salvage and use of un-oxidized spoil could be used as a substitute,
   •   Maximum level of < 0.1 of pyritic sulfur be retained,
   •   Adoption of a pH range 4.5 to 7.0 for overburden materials,
   •   All topsoil materials that are not on upland sloping soils must be salvaged
       according to the approved Mississippi regulatory program,
   •   Propose a methodology to prevent contamination of topsoil when it is being
       salvaged by being pushed over the highwall,
   •   Submission of a plan that will prove the restoration of productivity for one year of
       the deepest rooted row crop in accordance with the approved Revegetation
       Success Standards and consultation with the NRCS, and
   •   Correction of five editorial issues in the MCR report.

The Office of Geology adopted some but not all of the report’s recommendations. A few
of the recommendations adopted include the use of specific substitution materials and the
salvaging of certain materials.

Mid-Term Permit Review

The MCR was requested to review the current PHC as contained in the approved mining
permit. The review recommendations included the following:

   •   Revisions should be made to the PHC,
   •   Revisions should be made to the surface and ground water monitoring plans,
   •   Address concerns/questions of the data relating to the quality and quantity of
       surface and ground water under seasonal flow conditions for the permit and
       adjacent areas,
   •   Address questions/concerns of data relating to the presence of acid or toxic
       materials that may contaminate surface or ground water supplies, and
   •   Address presentations in the PHC related baseline hydrologic, geologic, and other
       information collected for the permit, including data statistically representative of
       the site.

The State is studying the report and will require those changes they determine to be
appropriate. The Office of Geology and the Office of Land and Water will develop the
CHIA with assistance from the MCR.


Permitting Reviews


                                         7
       The BFO provided assistance to the State regarding permitting reviews. The Office of
       Geology, OPC, and Office of Land and Water (OLW) are effectively working together on
       permit revisions and a permit modification. During the year, the State began the mid-
       term review. Also, deficiency letters were sent to MLMC requiring additional
       explanations and data submittals in order to approve, modify, or deny the revisions on
       soils and the modification on CCBs. With assistance from the MCR, OLW will assume
       the responsibility for writing the State’s CHIA for the modification and future permitting
       actions.

       With encouragement from OSM, the Office of Geology is working to improve the
       coordination between other offices or branches within MDEQ in relation to the coal
       mining review and decision-making processes. A coordinated effort will assure that all
       permit findings are made and all environmental safeguards are identified.

       In addition, the Office of Geology and the BFO met to discuss a revision submitted by
       MLMC concerning a request for a time variance for backfilling and rough grading. The
       variance would result in a considerable delay in completing all phases of reclamation.
       The State determined the company failed to demonstrate a need for the variance. Due to
       lack of supporting data, a portion of the revision request was withdrawn.

       Inspection and Reclamation Documentation Process

       The BFO provided assistance to the State regarding the inspection and reclamation
       documentation process. The process of identifying and documenting the milestones
       during the mining and reclamation process is to determine if the mining operation and
       reclamation activities are in accordance with the approved plans. This is critical in
       identifying and resolving issues as they occur, not after actions are completed and bond
       releases are requested.

       The BFO assisted the State through reviews of the permit modification and revisions as
       well as through joint mine inspections. As a result, the Office of Geology agreed to
       continue to study the time required for backfilling and rough grading to assure
       contemporaneous reclamation. MLMC will file quarterly reports with the State
       incorporating quarterly aerial photography showing: the complete removal of the lowest
       seam of lignite mined and the beginning and end of rough grading and backfilling. These
       reports from the MLMC will allow the State to more accurately assess mining and
       reclamation as it occurs.

VII.   GENERAL OVERSIGHT TOPIC REVIEWS

       Grant Review

       The MCR performed a review of the Office of Geology’s drawdown and disbursement of
       Federal funds for the period September 1, 2004 through April 30, 2006. The focus of the
       review was to determine if drawdowns of Federal funds were in accordance with the
       actual, immediate requirements and to determine if funds were immediately disbursed as

                                               8
required by the Federal Assistance Manual (FAM).

The State Treasurer disburses State funds to pay the Office of Geology’s Title V
Administrative and Enforcement expenses. The Office of Geology’s Federal grant fund
drawdowns are reimbursements to the State Treasury. Their drawdowns are one to two
months after the State Treasurer has disbursed State funds for expenses.

The study compared monthly drawdown amounts to monthly expense amounts and
comparing the timing of drawdown request to the date of immediate need. The analysis
determined the cash advances were limited to the amounts needed and were timed to
immediate needs. Therefore, the Office of Geology is in compliance with FAM
requirements for drawdown and disbursement of Federal funds.

Coordination with the U. S. Fish and Wildlife Service

The Office of Geology addressed the concerns resulting from an EY 2005 review of their
procedures for coordinating with the USFWS. The BFO recommended the State develop
procedures to assure all written notifications and consultations are conducted as required
in their regulations at Section 3103 (c) (1). Section 3103 (c) (1) specifies that written
notification of permit application must be made to certain Federal, State, and local
agencies, including the USFWS.

The Office of Geology produced a guidance document based on their regulations entitled
“Actions Required by the State of Mississippi Surface Coal Mining Regulations”. The
document captures all actions required by Section 3103. This document will be utilized
to assure all permit processing requirements are addressed by the State. An appendix to
the guide, “Section 3103 Mailing List”, has been developed that identifies all agencies to
be contacted including their addresses.




                                         9
                     APPENDIX A



     TABULAR SUMMARY OF CORE
       DATA TO CHARACTERIZE
           THE PROGRAM



The following tables present data pertinent to mining operations
and State regulatory activities within Mississippi. They also
summarize funding provided by OSM and Mississippi staffing.
Unless otherwise specified, the reporting period for the data
contained in all tables is the same as the evaluation year.
Additional data used by OSM in its evaluation of Mississippi’s
performance is available for review in the evaluation files
maintained by the Birmingham OSM Office.
                                                                               Mississippi
                                                              EY 2006 ending June 30, 2006




                                         TABLE 1


                              COAL PRODUCTION
                                (Millions of short tons)


        Period                 Surface              Underground
                                mines                  mines                     Total
Coal productionA for entire State:
    Annual Period


         2003                            3.739                   0.000                    3.739


         2004                            3.572                   0.000                    3.572


         2005                            3.595                   0.000                    3.595

        Total                          10.906                   0.000                    10.906


A Coal production as reported in this table is the gross tonnage which includes coal that is
  sold, used or transferred as reported to OSM by each mining company on form OSM-1
  line 8(a). Gross tonnage does not provide for a moisture reduction. OSM verifies tonnage
  reported through routine auditing of mining companies. This production may vary from
  that reported by States or other sources due to varying methods of determining and
  reporting coal production.




                                                 T-1
                                                                                                       Mississippi
                                                                                      EY 2006 ending June 30, 2006


                                                           TABLE 2

                                                INSPECTABLE UNITS
                                                    As of June 30, 2006

                                            Number and status of permits

                                Active or                                                                 Permitted acreage
     Coal mines               temporarily       Inactive                                                 (hundreds of acres)
     and related                 inactive       Phase II    Abandoned        Totals          Insp.
      facilities             bond release                                                    Units
                   IP   PP    IP     PP    IP   PP   IP   PP                                              IP       PP       Total
STATE AND PRIVATE LANDS REGULATORY AUTHORITY: STATE
 Surface mines        0    1     0       0    0    0    0                              1             1         0   58.09     58.09
 Underground mines    0    0     0       0    0    0    0                              0             0         0       0         0
 Other facilities     0    0     0       0    0    0    0                              0             0         0       0         0
  Subtotals           0    1     0       0    0    0    0                              1             1         0   58.09     58.09
FEDERAL LANDS            REGULATORY AUTHORITY: STATE
 Surface mines        0    0     0       0    0    0    0                              0             0         0        0         0
 Underground mines    0    0     0       0    0    0    0                              0             0         0        0         0
 Other facilities     0    0     0       0    0    0    0                              0             0         0        0         0
  Subtotals           0    0     0       0    0    0    0                              0             0         0        0         0
ALL LANDS
 Surface mines        0    1     0       0    0    0    0                              1             0         0   58.09     58.09
 Underground mines    0    0     0       0    0    0    0                              0             0         0       0         0
 Other facilities     0    0     0       0    0    0    0                              0             0         0       0         0
  Totals              0    1     0       0    0    0    0                              1             0         0   58.09     58.09

Average number of permits per inspectable unit (excluding exploration sites)                   1

Average number of acres per inspectable unit (excluding exploration sites)                   5,809

Number of exploration permits on State and private lands:          0                       On Federal lands:                  0


Number of exploration notices on State and private lands:          0                       On Federal lands:                  0


IP: Initial regulatory program sites
PP: Permanent regulatory program sites




                                                             T-2
                                                                                                                            Mississippi
                                                                                                           EY 2006 ending June 30, 2006




                                                                 TABLE 3

                                        STATE PERMITTING ACTIVITY
                                              As of June 30, 2006
                                   Surface                  Underground                        Other
     Type of                        mines                      mines                          facilities                        Totals
    Application           App.                           App.                        App.                              App.
                                                                           A
                          Rec. Issued        Acres       Rec. Issued Acres           Rec. Issued           Acres       Rec. Issued       Acres

New Permits                    0         0           0       0        0          0        0          0             0        0       0            0

Renewals                       0         0           0       0        0          0        0          0             0        0       0            0

Transfers, sales and           0         0                   0        0                   0          0                      0       0
assignments of
permit rights

Small operator                 0         0                   0        0                   0          0                      0       0
assistance

Exploration permits            0         0                   0        0                   0          0                      0       0

Exploration noticesB                     0                            0                              0                              0

Revisions (exclusive                     1                            0                              0                              1
of incidental
boundary revisions)

Incidental boundary                      0           0                0          0                   0             0                0            0
 revisions
Totals                         0         1           0       0        0          0        0          0             0        0       1            0

OPTIONAL - Number of midterm permit reviews completed that are not reported as revisions.                               0

A
    Includes only the number of acres of proposed surface disturbance.
B
    State approval not required. Involves removal of less than 250 tons of coal and does not affect lands designated unsuitable
    for mining.




                                                                     T-3
                                                                                                                                                                       Mississippi
                                                                                                                                                      EY 2006 ending June 30, 2006




                                                                                    TABLE 4
                                                                              OFF-SITE IMPACTS
     RESOURCES AFFECTED                                   People                               Land                               Water                           Structures
      DEGREE OF IMPACT                        minor       moderate    major       minor       moderate    major       minor       moderate    major       minor       moderate    major
 TYPE OF Blasting                        0            0           0           0           0           0           0           0           0           0           0           0           0
  IMPACT   Land Stability                0            0           0           0           0           0           0           0           0           0           0           0           0
    AND    Hydrology                     0            0           0           0           0           0           0           0           0           0           0           0           0
   TOTAL   Encroachment                  0            0           0           0           0           0           0           0           0           0           0           0           0
NUMBER OF Other                          0            0           0           0           0           0           0           0           0           0           0           0           0
EACH TYPE Total                          0            0           0           0           0           0           0           0           0           0           0           0           0

Total number of inspectable units:                                     1
Inspectable units free of off-site impacts:                            1

                                                  OFF-SITE IMPACTS ON BOND FORFEITURE SITES
     RESOURCES AFFECTED                                   People                               Land                               Water                           Structures
      DEGREE OF IMPACT                        minor       moderate    major       minor       moderate    major       minor       moderate    major       minor       moderate    major
 TYPE OF Blasting                        0            0           0           0           0           0           0           0           0           0           0           0           0
  IMPACT   Land Stability                0            0           0           0           0           0           0           0           0           0           0           0           0
    AND    Hydrology                     0            0           0           0           0           0           0           0           0           0           0           0           0
   TOTAL   Encroachment                  0            0           0           0           0           0           0           0           0           0           0           0           0
NUMBER OF Other                          0            0           0           0           0           0           0           0           0           0           0           0           0
EACH TYPE Total                          0            0           0           0           0           0           0           0           0           0           0           0           0

Total number of inspectable units:                                     0
Inspectable units free of off-site impacts:                            0




                                                                                              T-4
                                                                                               Mississippi
                                                                              EY 2006 ending June 30, 2006




                                                TABLE 5

      ANNUAL STATE MINING AND RECLAMATION RESULTS
                                                                                        Acreage released
    Bond release                 Applicable performance standard                           during this
       phase                                                                            evaluation period

      Phase I         - Approximate original contour restored
                      - Topsoil or approved alternative replaced                                   0.00

      Phase II        - Surface stability
                      - Establishment of vegetation                                                0.00

                      - Post-mining land use/productivity restored
                      - Successful permanent vegetation
      Phase III       - Groundwater recharge, quality and quantity
                        restored
                      - Surface water quality and quantity restored
                                                                                                   0.00
                                                                  A
                                  Bonded Acreage Status                                           Acres
Total number of acres bonded at end of last review period
                B
(June 30, 2005)                                                                                  3,625.00
Total number of acres bonded during this evaluation year                                           0.00
Number of acres bonded during this evaluation year that are
considered remining, if available                                                                  0.00
Number of acres where bond was forfeited during this evaluation
year (also report this acreage on Table 7)                                                         0.00


A
     Bonded acreage is considered to approximate and represent the number of acres
     disturbed by surface coal mining and reclamation operations.
B
     Bonded acres in this category are those that have not received a Phase III or other final
     bond release (State maintains jurisdiction).




                                                      T-5
                                    Mississippi
                   EY 2006 ending June 30, 2006




OPTIONAL TABLE 6




      T-6
                                                                                                    Mississippi
                                                                                   EY 2006 ending June 30, 2006


                                                     TABLE 7


                       STATE BOND FORFEITURE ACTIVITY
                                     (Permanent Program Permits)
                                                                                          Number
Bond Forfeiture Reclamation Activity by SRA
                                                                                          of Sites            Acres
Sites with bonds forfeited and collected that were unreclaimed as of
June 30, 2005 (end of previous evaluation year) A                                             0               0.00

Sites with bonds forfeited and collected during Evaluation Year 2006
(current year)                                                                                0               0.00

Sites with bonds forfeited and collected that were re-permitted during
Evaluation Year 2006 (current year)                                                           0               0.00

Sites with bonds forfeited and collected that were reclaimed during
Evaluation Year 2006 (current year)                                                           0               0.00

Sites with bonds forfeited and collected that were unreclaimed as of
June 30, 2006 (end of current year) A                                                         0               0.00

Sites with bonds forfeited but uncollected as of June 30, 2006 (end of
current year)                                                                                 0               0.00
Surety/Other Reclamation (In Lieu of Forfeiture)

Sites being reclaimed by surety/other party as of June 30, 2005 (end of
previous evaluation year)B                                                                    0               0.00

Sites where surety/other party agreed to do reclamation during Evaluation
Year 2006 (current year)                                                                      0               0.00

Sites being reclaimed by surety/other party that were re-permitted during
Evaluation Year 2006 (current year)                                                           0               0.00

Sites with reclamation completed by surety/other party during Evaluation
Year 2006 (current year) C                                                                    0               0.00

Sites being reclaimed by surety/other party as of June 30, 2006 (current
evaluation year) B                                                                            0               0.00
A
    Includes data only for those forfeiture sites not fully reclaimed as of this date
B
    Includes all sites where surety or other party has agreed to complete reclamation and site is not fully
    reclaimed as of this date
C
    This number also is reported in Table 5 as Phase III bond release has been granted on these sites




                                                            T-7
                                                                    Mississippi
                                                   EY 2006 ending June 30, 2006




                                      TABLE 8

                              STATE STAFFING
           (Full-time equivalents at the end of evaluation year)

                           Function                            EY 2006

Regulatory Program

 Permit review                                                     0.90

 Inspection                                                        0.63

 Other (administrative, fiscal, personnel, etc.)                   0.72
Regulatory Program Total                                           2.25

AML Program Total                                                  0.00
TOTAL                                                              2.25




                                            T-8
                                                                           Mississippi
                                                          EY 2006 ending June 30, 2006




                                    TABLE 9



                  FUNDS GRANTED TO MISSISSIPPI
                            BY OSM
                                 (Millions of dollars)

                                     EY 2006

               Type                          Federal             Federal Funding as a
                of                            Funds                 Percentage of
               Grant                         Awarded             Total Program Costs


Administration and Enforcement                           $0.11                      50

Small Operator Assistance                                $0.00                          0



               Totals                                    $0.11




                                          T-9
                                                                  Mississippi
                                                 EY 2006 ending June 30, 2006




                              TABLE 10


                      STATE INSPECTION ACTIVITY

                 PERIOD: JULY 1, 2005 - JUNE 30, 2006

         Inspectable Unit         Number of Inspections Conducted
             Status             Complete                   Partial
Active                             4                         10
Inactive                           0                          0
Abandoned                          0                          0
Total                              4                         10
Exploration                        0                          0




                                  T-10
                                                                    Mississippi
                                                   EY 2006 ending June 30, 2006




                                   TABLE 11


                       STATE ENFORCEMENT ACTIVITY

                      PERIOD: JULY 1, 2005 - JUNE 30, 2006

        Type of Enforcement            Number of            Number of
                Action                   Actions             Violations
Notice of Violation                          0                   0
Failure-to-Abate Cessation Order             0                   0
Imminent Harm Cessation Order                0                   0




                                      T-11
                                                                           Mississippi
                                                          EY 2006 ending June 30, 2006




                                      TABLE 12




                       LANDS UNSUITABLE ACTIVITY

                    PERIOD: JULY 1, 2005 - JUNE 30, 2006

Number of Petitions Received                              0
Number of Petitions Accepted                              0
Number of Petitions Rejected                              0

Number of Decisions Declaring Lands              Acreage Declared as
                                         0                                   0
Unsuitable                                        Being Unsuitable

Number of Decisions Denying Lands                 Acreage Denied as
                                         0                                   0
Unsuitable                                        Being Unsuitable




                                        T-12
     APPENDIX B



   STATE COMMENTS
    ON THE REPORT
         AND
RESPONSES TO COMMENTS