Kentucky surface-mining regulators completed less than 88 percent of the inspections they were supposed to do last fiscal year, and the coal industry's compliance with environmental standards was just 70 percent, according to a federal oversight report.
Both of those figures improved from the previous fiscal year, but even with the uptick, the industry's compliance level was near a two-decade low, the U.S. Office of Surface Mining Reclamation and Enforcement said in its review.
When the state doesn't conduct the required number of inspections, inspectors might not catch violations that can damage the environment and endanger people near strip mines, or it might take inspectors longer to spot problems, said Tom FitzGerald, executive director of the Kentucky Resources Council.
"There are public-safety issues. There are environmental-quality issues," FitzGerald said.
Kentucky enforces the federal surface-mining act within the state, with OSM oversight. The federal agency conducts an annual review of the state's performance, and the review was released this month for the fiscal year covering July 1, 2011, to June 30, 2012.
The report said the Kentucky Department for Natural Resources continued to make improvements in its oversight of surface mining, but concerns remain.
The law requires the state to complete one full and two partial inspections each quarter at each active mine and one full inspection on each inactive and abandoned mine, according to the OSM report. The state does more than 22,000 inspections annually on more than 1,800 mining permits.
For fiscal 2012, OSM found, the state met the required frequency on 87.7 percent of those "inspectable units," which include surface mines, the surface portions of underground mines, and roads and preparation plants. That rate was up from 83 percent in the three previous fiscal years but well below the state's historic rate of 98 percent, according to the report.
One reason the state was able to increase inspection frequency in fiscal 2012 was that the number of mines dropped. However, the department said the main reason for the increase was a "concentrated emphasis" on getting more inspections done, said Steve Hohmann, commissioner of the Department for Natural Resources.
Hohmann also said the department improved its inspection frequency to 99 percent in the most recent full quarter, immediately after the period covered in the OSM report.
The number of inspections dropped significantly beginning with the 2008-09 fiscal year. Many veteran inspectors left because of changes in the state retirement rules, and the state's budget problems since then have caused staff cuts and difficulty in filling vacancies.
The OSM report noted that Kentucky has given up more than $5.5 million in federal funding for its surface-mining enforcement program since 2008 because the state didn't come up with the required matching money.
The state Division of Mine Reclamation and Enforcement started fiscal 2012 with an authorized staff level of 180 employees, but that dropped to 175 because of a budget cut in late 2011, OSM said. Gov. Steve Beshear's budget for 2012-13 further reduced that staffing level to 167, OSM said.
The federal agency said it is imperative for the state to increase its budget for surface-mine enforcement in order to lighten the inspector workload — which is now above what is required — and increase the number of inspections.
Hohmann said the department plans to hire inspectors as the budget allows.
FitzGerald said the state made a deal with the coal industry to raise permit fees a few years ago, to process permit applications more quickly. However, none of the extra money went to enforce compliance with the permits, FitzGerald said.
Another issue identified in the OSM report was coal-industry compliance with environmental rules. OSM defines industry compliance as the percentage of joint random inspections in which federal and state inspectors see no violations.
In the past two fiscal years, only 70 percent of the permits in Kentucky were in full compliance on all standards, OSM said.
That was up from 65 percent in fiscal 2010 but well below the 88 percent level of a few years ago, according to the report. Industry compliance was last so low in 1990, at 60 percent, the federal agency said.
The report said Kentucky inspectors issued 1,331 notices of non-compliance for problems including sediment from surface coal operations getting into streams, up from 1,244 the year before.
The number of permits that did not have impacts on areas surrounding the mine site improved slightly to 82 percent, but that was well below the level of 97 percent in 2000, according to OSM's review. Such off-site impacts include landslides, pollution of streams and drinking-water wells, and pieces of rock being blown onto adjoining property by blasting.
The off-site impacts in 2012 affected 12 drinking-water wells, 46 homes and 127 miles of streams, OSM found.
Bill Bissett, president of the Kentucky Coal Association, said most coal producers try to do a good job with mining and reclamation, and he cited the increase in the level of compliance from two years ago as a positive sign.
One notable improvement in the state's inspection program was its work to assess the cumulative impact of mining on surface water and groundwater in mined areas, the federal agency found.
The state has used student interns to process information from water-monitoring reports and has set up trend stations to do a better job of gathering data on the impact of mining, the OSM report said.
The state made improvements after the Kentucky Resources Council threatened to sue over inadequate assessment of the cumulative impact of past, current and planned mining on watersheds — an assessment used in evaluating requests for mine permits.
OSM said the state also has improved mine mapping, taken a leadership role in promoting reforestation of mined land, and was the first state with control of enforcement to sign a state-federal agreement on permits for valley fills.
Coal companies create such fills when they blast away parts of mountains to reach the coal underneath. The companies often put much of the rock and dirt into nearby valleys. That process can destroy sections of streams, which is one reason mountaintop mining has become increasingly controversial in the past 15 years.
Bill Estep: (606) 678-4655. Twitter: @billestep1.