What will become of abandoned coal mines throughout Appalachia as more and more coal companies go bankrupt?
A report released by a coalition of groups in Central Appalachia Thursday suggests answers to that question that could benefit the region while acknowledging how steep the challenge will be.
The report, developed by the Reclaiming Appalachia Coalition, a regional collaboration aiming to redevelop communities across the region through mine reclamation projects, highlights the daunting reclamation bonding issues that West Virginia and other states face.
Enacted in 1977, the federal Surface Coal Mining and Reclamation Act allows states to regulate their own surface coal mining and reclamation operations while the Office of Surface Mining Reclamation and Enforcement maintains some oversight to keep state programs in compliance with the law, which requires coal mining permit applicants to post a reclamation bond to ensure that regulatory authorities have enough funding to reclaim the site.
But actual reclamation costs may exceed bond amounts, and Thursday’s report says the cost of reclaiming at least 490,000 acres of mined land in West Virginia, Kentucky, Ohio, Virginia and Tennessee may amount to $6 billion, far more than the $2.5 billion the report says those states have in available bonds based on a review of state and federal data.
A recent trend in bankruptcies among coal companies raises the concerning possibility that much of that land will remain unreclaimed if companies forfeit their bonds.
“We have not yet seen a large company abandon many mines, but we are likely about to. Many state bonding programs were not designed to withstand widespread forfeiture resulting from multiple bankruptcies or even the bankruptcy of a single large company,” states the report.
More than 50 coal companies have gone bankrupt over the past decade.
The report notes the coal company Blackjewel’s 2019 bankruptcy declaration and a Kentucky Energy and Environment Cabinet finding that the reclamation costs stemming from permits mainly in Kentucky but also in West Virginia and other states would exceed available bonds by $38 million. That’s just $8 million less than the funding the Kentucky Reclamation Guaranty Fund has in its funding pool, according to the report.
Insufficient data on reclamation needs and costs makes determining the extent of bonding shortfalls tricky, but the report concludes that it’s still evident that the bonding system may be ill-equipped to stop a new wave of abandoned coal mines in Central Appalachia.
“Not only does this put landowners and nearby residents at risk, it extends the amount of time that these permits can damage land and water, and makes it harder for local economies to move forward,” the report states.
Evidence of a bonding shortfall in West Virginia surfaced last year in a motion filed by the state Department of Environmental Protection.
The DEP in March sued in Kanawha County Circuit Court to appoint a special receiver to assume the responsibilities of ERP Environmental Fund, Inc., a company that acquired more than 100 mining permits following Patriot Coal Corporation’s bankruptcy in 2015.
ERP laid off all its employees and management as of March 20 and ceased operations, leaving its mining sites abandoned and public health and safety threatened, according to the DEP motion. The DEP reported the costs of reclaiming and remediating ERP’s sites totaled more than $230 million.
The agency said the state Special Reclamation Fund would assume responsibility for reclaiming and remediating all of ERP’s mining sites, the environmental groups’ complaint says. That could potentially “overwhelm the fund both financially and administratively,” with many of ERP’s sites “expected to begin to threaten imminent and identifiable harm to the environment and the public health and safety,” according to the complaint.
Indemnity National Insurance Company, which issued about $125 million in surety bonds backing ERP’s obligations under its mining permits, agreed to provide $1 million in funding to Doss Special Receiver, LLC to fund its operations for an initial period of 90 days, leaving a $114- to $229-million deficit between reclamation costs and available money, depending on DEP’s ability to collect ERP’s bonds.
Thursday’s report estimates that more than 150,000 acres across West Virginia have been reclaimed while around 40,000 remain are unreclaimed.
Nearly half of the $2.5 billion in available bonds throughout the five-state Central Appalachian region is located in West Virginia, according to the report, which notes that reclamation costs vary widely based on the permit.
The report calls on state mining agencies and the federal Office of Surface Mining Reclamation and Enforcement to work together to figure out reclamation needs and liability, the health of state bonding programs and how to incentivize timely reclamations that leave former mine sites in safe, usable condition.
Founded in 2016, the Reclaiming Appalachia Coalition consists of the Wayne-based Coalfield Development Coalition, Virginia-based Appalachian Voices and Ohio-based Rural Action. It has provided technical assistance to local government entities and community organizations, resulting in partnerships that the coalition says have provided nearly $19 million in abandoned mine land pilot funding in an effort to create sites that can be developed sustainably with an environmentally friendly approach.