Modern-era coal mine clean up could cost billions, report says

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(Farm and Dairy) – Even as legislators consider additional funding for reclaiming pre-1977 abandoned mine lands, coal company bankruptcies starting in 2015 could lead to a new wave of modern-era abandoned mine land issues.

A July 7 report from Appalachian Voices found a total of 633,000 acres across seven states — Ohio, Pennsylvania, West Virginia, Kentucky, Tennessee, Virginia and Alabama — still in need of some reclamation. That could cost $7.5 to $9.8 billion. And as more coal companies declare bankruptcy, there could be gaps in the money available to clean up mines, and the money needed to do it.

Bonds

In 1977, Congress passed the Surface Mining Control and Reclamation Act. This act required coal companies to clean up mining sites, and to have reclamation bonds, which regulatory agencies can use to clean up mine lands if a coal company goes bankrupt.

But bonding programs vary by state, and don’t always require companies to have bonds that cover the full cost of clean up — for example, some include pool bonds, which are pools of money funded by fees from coal companies and intended to cover costs if some companies forfeit their mines.

In these cases, companies can get lower bonds that are specific to their permits, since they are also paying into that pool of money. These programs, however, are not set up to cover the cost of every permit in the pool.

The report, “Repairing the Damage: The costs of delaying reclamation at modern-era mines,” found a total of $3.8 billion in bonds available across the seven states, far less than the estimated $7.5-9.8 billion necessary.

Coal companies have continued to declare bankruptcies since 2015. This leaves less companies to take over mines, which means more companies are having to forfeit their bonds and leave clean up to state agencies.

It’s impossible to predict how many companies will declare bankruptcy and have to forfeit their bonds, but if that pattern continues, there may not be enough money in state pools to cover those costs.

States

Ohio Coal Association president Mike Cope noted Ohio’s bond pool currently has about $25 million in the fund, and said the three major bankruptcies the state has seen with coal companies so far have had no negative effects on reclamation at this point. He also said coal markets are looking up, due partly to price increases in natural gas and oil, in an emailed statement to Farm and Dairy.

Pennsylvania’s outstanding reclamation costs are relatively high, compared to Ohio and some of the other states the report studied, but the bonds it has available are also relatively high. In West Virginia, the current situation seems a little more dire, according to a case study in the report.

In early 2020, the state Department of Environmental Protection filed a lawsuit to put ERP Environmental Fund into a receivership, which means that a third party would manage the company’s mines.

At that point, the company’s 100 permits had $115 million in bonds from Indemnity National Insurance Co. But the estimated cost of reclamation, if the company forfeited its mines — about $230 million — would have been enough to bankrupt the insurance company and overwhelm West Virginia’s pool bond fund. The West Virginia Coal Association did not respond to a request for comment.

AML

These figures are all separate from the pre-1977 abandoned mine lands and costs. The 1977 act also created the Abandoned Mine Land Trust Fund, designed to repair damage from two centuries of mining.

An earlier report found more than 850,000 acres left to be cleaned up under that program. Congress is currently considering legislation to extend support for the fund, which is set to expire in September, for another 15 years.

The federal government estimates it needs another $10 billion to finish that work. Some groups’ estimates are higher, at closer to $26 billion, said Erin Savage, senior program manager at Appalachian Voices and author of the new report, in a July 7 webinar.

Impact

Getting moving on modern-era mine reclamation could have benefits for more than just the environment, Savage said — it could put some people back to work. Over the last 10 years, the coal industry in the seven states has lost about 27,000 jobs. The report estimates that reclaiming those 633,000 acres over 10 years could create 2,300 to 4,500 jobs annually.

“I’ve never talked to a miner who said ‘I just like mining coal, and then, I would love it if we just left the land unreclaimed’ — they want to do the reclamation work,” Savage said.

Reclaiming land also makes it available to be productive again, whether in the form of forestry or wildlife habitat, or for economic development.

Suggestions

The report includes a few suggestions for addressing these issues. Getting rid of alternative bonding structures that don’t require companies to provide full-cost bonds, and planning ahead for long-term water treatment around mine sites, could help prevent future issues.

Savage also suggested a federal program could fill the gap on reclamation for sites where permits have already been forfeited and bonds do not cover the full costs. She stressed, however, that this program should not act like a coal company bailout, and should be in addition to, and not in place of, funding already set for pre-1977 abandoned mine lands clean up.

Finally, the report encouraged regulatory agencies to enforce reclamation requirements and make sure companies get clean up done in a timely manner, and suggested federal and state agencies create a national inventory of outstanding reclamation needs and costs.

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