Environmentalist groups have zeroed in on a West Virginia mine reclamation fund report to make their case in court that the state’s mine cleanup process needs its own cleanup.
The Ohio Valley Environmental Coalition, the West Virginia Highlands Conservancy and the Sierra Club argue in their lawsuit filed Monday against federal Office of Surface Mining Reclamation and Enforcement Deputy Director Glenda Owens that the office has failed to require more stringent requirements for the state’s federally approved surface mining program that would ensure coal companies fully fund reclamation bonds.
A January report from the state’s advisory council responsible for operating the state Special Reclamation Fund noted that reclamation work had not been completed on 118 of 636 permits requiring reclamation since the council was created in 2001.
The fund was designated by the Legislature to reclaim land subjected to surface mining operations and abandoned after 1977 where the bond posted failed to cover reclamation costs.
At the end of 2020, the Special Reclamation Fund had a balance of $38.8 million and the Special Reclamation Water Trust Fund — set up to assure capital to build and maintain water treatment systems on forfeited sites — had a balance of $145 million, according to the report from the Special Reclamation Fund Advisory Council.
But the environmentalist groups that sued the Biden administration Monday contend that the council’s report showed that the council had failed to ensure the long-term solvency of the fund.
The groups noted that the report did not mention a special receivership that was set up to protect the state’s reclamation fund after the financial collapse of a company, ERP Environmental Fund Inc., that had acquired more than 100 mining permits following Patriot Coal Corp.’s bankruptcy in 2015.
In March 2020, the state Department of Environmental Protection sued in Kanawha County Circuit Court to appoint a special receiver to assume the responsibilities of ERP Environmental Fund Inc., which laid off all its employees and management that month and ceased operations, leaving its mining sites abandoned and public health and safety threatened, according to the department’s motion.
The DEP reported that the costs of reclaiming and remediating ERP’s sites totaled more than $230 million.
Indemnity National Insurance Co., 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 the DEP’s ability to collect ERP’s bonds.
“Likewise, the Advisory Council Annual Report fails to mention or analyze any of the other current or threatened insolvencies that could result in reclamation responsibilities of even greater magnitude than the failure of ERP,” the groups wrote in the lawsuit.
The lawsuit alleges that the Office of Surface Mining Reclamation and Enforcement should have taken action toward stronger requirements for the program after the DEP notified the office of a significant change in the state’s reclamation program.
The department sent the notification after the environmental groups that filed Monday’s lawsuit had sued to compel it to do so, arguing that the department should have informed the office that some permit holders have, or will, become insolvent.
The groups agreed to have that lawsuit dismissed after West Virginia environmental regulators let the federal surface mining reclamation office know of a substantial change in its special reclamation fund on Dec. 30.
The estimated cost of reclaiming 3,317 acres of forfeited mine sites across West Virginia — sites where the responsible party could not meet their reclamation obligations — is $22.3 million, according to DEP acting spokesman Terry Fletcher.
Fletcher said that, of 136,172 acres that have been disturbed by open coal mining permits in West Virginia as of Thursday, 27,199 are currently unreclaimed. But Fletcher said the DEP does not have any estimate on the cost to reclaim the sites readily available because they are bonded.
A report released in January by the Reclaiming Appalachia Coalition, a regional collaboration aiming to redevelop communities across the region through mine reclamation projects, estimated that the cost of reclaiming at least 490,000 acres of mined land in West Virginia, Kentucky, Ohio, Virginia and Tennessee could be $6 billion. That’s far more than the $2.5 billion the report says those states had in available bonds based on a review of state and federal data.
Blackjewel’s shutdown of 32 coal mines amid that company’s bankruptcy proceeding across four states, mainly in Kentucky but also in West Virginia, has left behind mine-linked messes and questions about where the funding will come from to clean them up as other coal companies follow Blackjewel into bankruptcy.
“The only relief that we can seek and are seeking through this lawsuit is for the federal OSMRE to determine that a [change to West Virginia’s reclamation bonding program] is required,” Sierra Club senior attorney Peter Morgan said.
Morgan noted that West Virginia could significantly increase its per-ton tax that funds its reclamation bond pool or end the pool in favor of requiring mine operators to post full-cost surety bonds.
“We’re not prescribing a specific solution,” Morgan said. “But that process takes some time, and we’re very eager for that process to begin.”
The Special Reclamation Fund Advisory Council, though, recommended in its January report that the present 12.9-cent-per-ton tax dedicated to the fund remain as is and that the tax dedicated to the Special Reclamation Water Trust Fund stay at 15 cents per ton.
The council is required by state code to consist of the DEP or their designee, the state treasurer or their designee, the director of the National Mine Land Reclamation Center at West Virginia University and five Senate-approved members appointed by the governor.
Fletcher says that the DEP’s Office of Special Reclamation has reclaimed 21 sites, including land reclamation and water treatment costs, using money just from the Special Reclamation Fund since 2016.
But the environmentalist groups suing the federal Office of Surface Mining Reclamation and Enforcement want the feds to make West Virginia do far more to position itself for a future where unreclaimed mine sites keep adding up.
“The clock is ticking on all of this,” Morgan said.