Field and modeling studies were performed to characterize two-phase flow within the natural cleat structure of an upper Cretaceous sub bituminous coal seam. A two borehole pattern with open completion was used in a study of dewatering and tracer residence time distribution, Air was used as the airborne tracer. Air inflow and air and water production rates and tracer arrival times were monitored. The field tests were simulated with a two-phase three component porous flow code. Results showed that the air inflow and air and water outflow rates and breakthrough times could not be modeled assuming a uniform darcy-type permeability. The use of a pressure dependent permeability did provide, however, a much better match with the field data.