Bonding systems don't protect taxpayers

Photo by Giles Ashford

The 1977 Surface Mining Control and Reclamation Act requires coal companies to clean up and reclaim mined land. When they cannot or do not, the states are supposed to have bonding systems in place to pay for the reclamation. When those systems are inadequate, the federal government is supposed to step in with its own system.

Every link in that chain is designed to protect taxpayers from having to pay for reclamation and pollution clean-up at former mine sites – costs that are supposed to be born by the mining companies. And every link is the weak link.

Too often, companies go bankrupt or disappear before reclamation is complete. (Massey Energy made a science out of shifting the responsibility for reclamation onto fly-by-night contractors that went bankrupt by the dozens.)

State programs that depend either on individual site bonds, a per-ton reclamation tax or some combination of the two are universally underfunded.

The federal government rarely steps in to take over inadequate state programs – though it occasionally threatens to as the U.S. Office of Surface Mining just did in Kentucky.

Through a series of lawsuits and settlements, Appalachian Mountain Advocates has dramatically improved funding for West Virginia’s bond system.

A lawsuit we brought in 2001 resulted in the per-ton reclamation tax on coal increasing from a paltry 3 cents per ton to 14 cents per ton. That remained woefully inadequate. The West Virginia Department of Environmental Protection didn’t have the money to adequately treat the dozens of abandoned sites it was responsible for. In fact, it didn’t even issue necessary water pollution permits or propose adequate water treatment systems for those sites.

In 2007, we brought two cases challenging DEP’s failure to issue permits or adequately control pollution at 21 of the worst sites. In both cases, federal judges ruled against the DEP. The 4th Circuit Court of Appeals upheld the first ruling. DEP did not challenge the second. Because of those victories, stringent Clean Water Act permits are now required at bond-forfeiture sites throughout West Virginia, Maryland and Virginia. When we threatened to sue over the dozens of remaining sites, DEP agreed to an important settlement.

As part of the settlement, DEP had to provide an inventory of the sites it is responsible for, rank them according to which have the worst problems and provide an estimate of treatment costs to the Special Reclamation Advisory Council. Partly because of that estimate, the council recently recommended the legislature nearly double the reclamation fund tax to 27.9 cents a ton. The legislature agreed. Over the next 10 years,  the coal industry will be required to pay an additional $300 million to ensure adequate pollution controls, according to current forecasts for coal production in West Virginia. That, along with the $150 million the 2001 increase cost the industry over the last 10 years, is money that would have otherwise come from taxpayers.

That was a tremendous success, but West Virginia’s bonding system remains inadequate. West Virginia is not alone. The systems in Kentucky, Virginia and Tennessee each have their own serious weaknesses that must be addressed.

For instance, we recently filed a notice of intent to sue in Kentucky over that program’s failure to adjust bonds for permits when there’s evidence that long-term treatment for selenium will be required. Selenium is enormously expensive to treat, and treatment will be required in perpetuity.

Obviously, when a mine site has selenium issues, the potential costs associated with the reclamation and clean up of that site escalate dramatically. If bonds aren’t increased to cover those costs, taxpayers are likely to end up with the bill.

Preventing that is the reason for SMCRA’s bonding requirements. Bonding systems that don’t require coal companies to put up adequate funds to ensure adequate treatment of long-term pollution discharges are failing taxpayers.

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