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Bad cost to bond comparison

Appalachian Voices senior program manager Erin Savage presented this graph during a teleconference Wednesday detailing the daunting scope of the problem of insufficient mine reclamation funding facing West Virginia and other Appalachian states. “West Virginia and Kentucky are looking honestly pretty bad here,” Savage said upon presenting the graph. “They have a high amount of reclamation needed and a relatively small amount of total [reclamation] bonds.”

Appalachia has a multibillion-dollar coal mine reclamation problem. A report released Wednesday highlights just how daunting it is.

It will cost from $7.5 billion to $9.8 billion to reclaim 633,000 acres of just coal mines that have been closed or idled since 1977 across seven Appalachian states, according to the report from environmental nonprofit Appalachian Voices.

That’s twice as much as the $3.8 billion in total bonds available to those states, according to the report.

The report’s author, Appalachian Voices senior program manager Erin Savage, said in a teleconference Wednesday that Appalachian state environmental regulators need to do far more to address the shortfall poised to grow as more coal companies declare bankruptcy, ditch their reclamation obligations and leave state bonding systems on the hook.

“I’ll be honest, I have not seen the state agencies take this issue as seriously as I hoped they would,” Savage said. “This is something that we’ve been talking to at least some of them about for several years now.”

West Virginia has an estimated 205,000 acres of land under active permits that are either unreclaimed (36,000) or partially reclaimed (169,000), according to the report.

That’s more than the six other states in the study: Kentucky (54,000 unreclaimed, 139,000 partially reclaimed); Pennsylvania (69,000 unreclaimed, 49,000 partially reclaimed); Virginia (18,000 unreclaimed, 35,000 partially reclaimed); Alabama (17,000 unreclaimed, 16,000 partially reclaimed); Ohio (6,000 unreclaimed, 13,000 partially reclaimed); and Tennessee (7,000 unreclaimed, 5,000 partially reclaimed).

That does not include mine lands abandoned before Congress’s 1977 passage of the Surface Mining Control and Reclamation Act, which established the federal Office of Surface Mining Reclamation and Enforcement that works with states to oversee mine cleanup.

The law created the Abandoned Mine Land fund to reclaim coal mines abandoned prior to its passage, and has not come close to cleaning up abandoned mine sites.

The new report observes that the Office of Surface Mining Reclamation and Enforcement has given states “significant leeway” in setting up bonding programs, resulting in insecure bonding mechanisms and bond amounts that don’t cover actual reclamation liability.

West Virginia, Kentucky, Ohio and Virginia allow state pool bonds in which mining permittees have permit-specific bonds but also pay fees into a state pool, holding permit-specific bonds at a lower amount than would be required by the full-cost bonding required in states like Alabama, Pennsylvania and Tennessee.

During her report presentation Wednesday, Savage showed a graph comparing estimated reclamation costs to total available bonds in Appalachian states.

“West Virginia and Kentucky are looking honestly pretty bad here,” Savage said. “They have a high amount of reclamation needed and a relatively small amount of total bonds.”

The report estimates that between 31% and 49% of West Virginia’s total reclamation liability is covered by bonds, projecting that the state’s total liability could soar as high as $3.56 billion.

But Savage’s study defers to a state legislative audit report released last month that offers the even more daunting estimate that bonds cover only 10% of reclamation costs in West Virginia.

“That report, the findings in it, I would say are worse than the findings in my report regarding [West Virginia],” Savage said. “That seems to indicate I am on the mark, or even a bit conservative, which is where I was trying to be.”

But even Savage’s report notes that West Virginia’s bonding system is already at risk of failure with more large-scale mine abandonment to come.

The West Virginia Legislature adopted a resolution last week urging the federal government to allocate $8 billion to the state to reclaim forfeited mine sites and support struggling coal communities. The resolution had been advanced to the Senate and House of Delegates by a joint legislative committee lawmakers formed earlier this month to go after federal stimulus money for mine reclamation.

“That resolution does not really suggest how [West Virginia] is going to ... hold companies responsible or if they would do anything to try to improve their bonding system,” Savage said.

The audit report found that legislators and environmental regulators risk letting the state’s mining reclamation program slip into insolvency through lax statutory and permitting oversight. It called on the Legislature to commission a study to evaluate the mining reclamation program, something it did not do during a subsequent interim legislative session last month.

The reports from Appalachian Voices and the state Post Audit Division both focus on the Department of Environmental Protection’s admission, in a lawsuit it filed in March 2020 in Kanawha County Circuit Court against ERP Environmental Fund Inc., a coal mining company, that assuming responsibility for reclaiming and remediating all of ERP’s mining sites could potentially overwhelm the state’s special reclamation fund, financially and administratively.

The department reported that the costs of reclaiming and remediating ERP’s sites total more than $230 million. ERP laid off all its employees and management, as of March 2020, and ceased operations, leaving its mining sites abandoned and public health and safety threatened, according to the department’s lawsuit to appoint a special receiver to assume ERP’s responsibilities.

ERP acquired more than 100 mining permits following Patriot Coal Corp.’s bankruptcy in 2015.

The Appalachian Voices report urges the Office of Surface Mining Reclamation and Enforcement to work with states to complete a nationwide inventory of outstanding reclamation needs and costs. It calls on the federal office and state agencies to enforce bonding and reclamation requirements more stringently and prohibit the practice of pool bonding that has limited West Virginia and other states’ reclamation bonding oversight.

Reclaiming 633,000 acres throughout the seven states would create between 23,000 and 45,000 job-years, the report estimates, forecasting that West Virginia has the most job-years to gain — 12,831 — if 30% of total reclamation costs are spent on payroll. A job-year is one job for one year.

“Getting this reclamation started will literally put coal miners back to work doing the reclamation they were always supposed to be doing,” Savage said.

Rebecca Shelton, policy director at the Whitesburg, Kentucky-based legal nonprofit Appalachian Citizens’ Law Center, which pushes for legislation that funds abandoned mine land reclamation, joined Savage during the teleconference and made the case that states looking to lift up coal communities whose economies are lagging can’t afford not to protect their people.

“This is really unsafe for the people who live near these sites and downstream of these sites,” Shelton said. “And also, just generally, the country is having a conversation about how do we revitalize these communities? How do we invest back into coal communities? How do we transition them into something new? That’s hard to do when you have hundreds of thousands of acres of unreclaimed mine land that nobody wants to live nearby.”

Reach Mike Tony at

mtony@hdmediallc.com, 304-348-1236 or follow

@Mike__Tony on Twitter.

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