A month ago, Royal Scot Minerals Inc. abandoned its coal mine near Anjean in Greenbrier County. The company turned off an electric water treatment system. Acid mine drainage poured into Little Clear Creek, a trout stream that feeds the Meadow River. State Division of Environmental Protection officials moved quickly. DEP inspectors heard about the problem on April 26, revoked the company's permit the next day, and restarted the water treatment system the day after that. When Royal Scot received state mining permits, the company posted $3.1 million in reclamation bonds. The Little Clear Creek reclamation may cost $10 million or more, DEP estimates. The extra $6.9 million is supposed to come from DEP's Special Reclamation Fund, or SRF. But the fund is broke. The SRF has $62 million less than what it needs to reclaim the mine sites currently covered by the program, according to the U.S. Office of Surface Mining's most recent count. That estimate is nearly 4 years old. After 1995, OSM stopped publishing SRF deficit estimates in its annual reports. More recent OSM reports, however, show the problem is getting worse. Each year, 2 acres of mines are abandoned for every acre the state cleans up with SRF money, according to OSM reports. For every $1 in bond money the SRF collects, the fund spends $2 on reclamation. Last week, OSM released a report that shows that, since 1992, the SRF spent an average of $700,000 per year more than it took in. Last year, coal companies forfeited bonds for 64 mine sites covering 2,176 acres. The state reclaimed 26 mine sites covering 1,106 acres. Currently, the SRF has a backlog of more than 260 abandoned mines covering 10,000 acres "Under current projections, the bond fund will not be sufficient to eliminate the backlog of unreclaimed forfeiture sites for 10 to 20 years without any consideration of other sites added for water treatment," OSM said in a 1997 report. At least 100 forfeited mine sites have water problems, OSM said. DEP officials do not publicly admit that there is a problem. Last week, DEP Director Michael Miano issued a news release to tout the agency's response to the Little Clear Creek problem. "It's a shame that some people still insist on being reckless toward the environment," Miano said. "I'm glad that we have the resources available and a program set in place to handle such actions." Miano did not mention the SRF insolvency. On Friday, Miano said, "I can't speak intelligently about the actuarial situation with that fund. I know we are working with that, and have met on that and discussed how we are going to meet our liabilities. "I sort of look at it like an insurance company and I guess if every policy claim that could possibly be made came due at once, no insurance company could handle that." In 1991, OSM ordered DEP to submit a plan by December 1995 to fix the SRF. OSM said the state must come up with a way to "eliminate the deficit in the [SRF] and to ensure that sufficient money will be available to complete reclamation, including the treatment of polluted water, at all existing and future bond forfeiture sites." DEP has never submitted that plan. OSM has done little to force the state to take action. Roger Calhoun, director of the OSM Charleston field office, said, "I don't think it's that we have done nothing. There has been progress in trying to develop that plan. "We're going to have to develop some comprehensive solutions," Calhoun said. "There is not an easy fix." The 1977 Surface Mining Control and Reclamation Act requires companies to post reclamation bonds in order to obtain mining permits. The bonds are supposed to pay for reclamation if the companies go belly up or just walk away from a mine. Mines that were abandoned before August 1977, when the law took effect, are cleaned up with a pool of money from coal production taxes. If a coal company abandons a mine after August 1977, and the bond won't cover reclamation costs, the SRF is supposed to step in. The SRF is funded by (1) forfeited reclamation bonds, (2) a separate per-ton coal tax, and (3) interest on those funds. Ten years ago, OSM first warned the state the SRF had problems. A 1989 annual OSM report said the state was mistakenly assuming it cost $1,000 per acre - or the amount companies posted in bonds - to clean up abandoned mines. At the time, it cost $2,000 an acre to reclaim a mine. So, the state SRF had $2.4 million less than it needed to reclaim mines covered by the program, OSM said. Since 1989, OSM has annually warned state regulators that the SRF is underfunded. In the last few years, DEP has made some improvements. The Legislature allowed site-specific bonding: Mines with larger potential pollution problems would have to post larger bonds. But bonds were capped at $5,000 an acre. It can cost tens of millions of dollars to reclaim a few-acre mine site with acid drainage problems. Lawmakers also increased the per-ton SRF coal tax, from 1 cent to 3 cents. But OSM said the money coming in is still not enough. Last year, OSM and DEP formed a team to evaluate the SRF. The team has studied, written reports, held meetings and taken no action. The matter may end up in court. In April 1998, the Highlands Conservancy threatened to sue the DEP over the SRF.
To contact staff writer Ken Ward Jr., call 348-1702.