Feds want Kentucky to charge coal industry more for cleaning up mines

jcheves@herald-leader.comAugust 2, 2012 

State Rep. Keith Hall, D-Phelps

FRANKFORT — Kentucky fails to make the coal industry pay enough to clean up the environmental wreckage it leaves behind, according to the U.S. Office of Surface Mining.

Though state and federal regulators are negotiating this summer in an attempt to solve the problem, Kentucky lawmakers said Thursday the criticism is another example of President Barack Obama's "war on coal."

Making companies pay larger reclamation bonds — as required by a 1977 federal law on surface mining — is a political move intended to destroy coal companies, the lawmakers said at a joint meeting of the Committee on Natural Resources and the Environment.

"They want to make coal mining illegal," said Rep. Keith Hall, D-Phelps, who has various business interests in the coal industry. "I don't want to roll over dead and play stoolie in front of the federal government, either, because I believe in states' rights."

"There is an assault on Kentucky, and really on our way of life," said Rep. Jim Gooch, D-Providence, who also has business interests related to the coal industry.

When coal companies successfully restore mined land to the conditions listed in their state permits, their reclamation bonds are returned to them. However, when companies disappear — sometimes through bankruptcy — their bonds are virtually all that exists to pay for the environmental damage they leave.

In a May 1 letter to the state Energy and Environment Cabinet, the federal OSM said Kentucky's reclamation bonds long have proven inadequate. OSM will take over Kentucky's post-mining reclamation process unless the state begins to require bonds large enough to pay the full costs of land restoration, federal officials warned.

Fifteen to 25 mining permits are forfeited in Kentucky annually, according to state data. Most of the forfeited bonds prove too small to pay for the necessary hauling of rocks and dirt, grading of land, revegetation and cleaning of ponds and streams.

In an average year, the state Division of Abandoned Mine Lands faces more than $4 million in unfunded reclamation costs, which means some or all of the necessary work isn't completed. That leaves land scarred and affects neighbors' properties.

"One of the many examples is the case of Susie Campbell, whose property was mined by Leslie Resources and became part of the Horizon Natural Resources bankruptcy," Tom FitzGerald, director of the Kentucky Resources Council, said in an interview Thursday.

"Her property is all but unidentifiable now because the landform was not restored, the post-mining land use not achieved and the bond was not adequate to assure that it would be properly done," FitzGerald said.

The federal government has urged Kentucky for years to require larger bonds, but the bond formula has not been touched since 1993, the OSM said in its May letter.

"I appreciate the complexities of the matter and recognize that the deficiencies that developed over the past decade or more will take a concerted effort over time to resolve. Nonetheless, it is time to make actual progress," Joseph Pizarchik, director of OSM Reclamation and Enforcement, wrote to the state.

Gov. Steve Beshear's administration responded in May with a compromise proposal that raised the cost of reclamation bonds. It started with an increase in the minimum bond amount required for a mining permit, from $10,000 before the change to $75,000 now. Three dozen existing permits that have been reviewed or renewed since May climbed from $66,136 in bonds on average to $154,415.

But even those larger bond amounts wouldn't fully cover reclamation costs for more than one-third of abandoned mine lands, the state acknowledges.

"We have determined that requiring adequate full-cost reclamation bonds for each coal mining operation in Kentucky is impractical and unaffordable to many operators in the commonwealth," state Energy and Environment Secretary Len Peters wrote to the OSM in June. The new bonding levels will "increase the likelihood that the site will be fully reclaimed in the event of forfeiture," Peters wrote.

To help cover the difference, the cabinet in January will ask the General Assembly to authorize a bond pool, financed by fees on coal operations, that could be tapped when an individual company's reclamation bond fell short.

Specific plans for the bond pool are being developed. The cabinet plans to meet with OSM on Wednesday to present an update on its proposal. Federal regulators were withholding judgment this week.

"We're pleased with the state's actions thus far. But this is an ongoing process. There is going to be a lot more discussion between us as we try to move forward," said Joseph Blackburn, Lexington field office director for OSM.

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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