State regulators did fewer inspections at surface mines than required last fiscal year, meaning that some environmental violations weren't caught and corrected as soon as they could have been.
The state completed only 82.8 percent of the inspections it should have between July 1, 2008, and June 30, 2009, according to a review by the U.S. Office of Surface Mining Reclamation and Enforcement.
That was down from 97.1 percent the prior fiscal year and 98.6 percent in the 2006-07 fiscal year, according to the report.
The drop in inspections came during a year the state Division of Mine Reclamation and Enforcement was short-handed after a wave of retirements — meaning the most experienced people left — and didn't have the money to quickly hire replacements because of budget cuts to help deal with the state's financial problems.
The state had to give back $1 million in federal funding because it didn't come up with enough money to match a federal grant for the surface-mining program, and might have to give back an additional $800,000, according to the OSM report.
The federal government gives Kentucky money to review surface-mine permits, inspect mining and reclamation and do other work, but in that particular program the state has to match the federal grant dollar for dollar.
Whatever the state doesn't match, it forfeits.
The division, which also inspects surface areas disturbed by underground mining and non-coal facilities such as quarries, also faced earlier budget cuts and lost some positions permanently.
State policymakers have not given the regulators the money needed to adequately oversee surface coal mining, even though a core of dedicated employees tries to do so, said Tom FitzGerald, executive director of the Kentucky Resources Council.
"You've got an agency that is not getting the income it needs to get the job done," FitzGerald said.
The fact that the division is shorthanded and didn't meet the required inspection frequency is evidence of that, FitzGerald said.
The state is supposed to do one complete inspection of each surface-mining operation each quarter — including inactive and abandoned mines — and two partial inspections, in which regulators look at selected standards.
Completing fewer means that problems such as runoff from a mine site contaminating water could go on longer before an inspector spots them, FitzGerald said.
"This is an environmental, health and public safety issue," he said.
In his view, the drop in inspections and the staffing shortages jeopardized the state's control of the surface-mining program.
The law that controls surface mining and reclamation is a federal law, but OSM has given most mining states approval to enforce the law themselves, with federal oversight.
The only coal state without that arrangement, called state primacy, is Tennessee.
FitzGerald said he plans to ask OSM's field office in Lexington to review whether the federal government should revoke primacy in Kentucky and directly police surface mining.
If that were to happen, it could mean significant changes, he said, such as more stringent environmental review.
However, Jim Dickinson, director of the Division of Surface Mining and Enforcement, said even if OSM began a primacy review, the agency would have to give the state a chance to fix problems before taking away the program.
Dickinson said he thinks that, despite cutbacks, the state is meeting its requirement to vigorously enforce surface-mining rules.
As the division worked through high turnover the last 18 months, inspectors focused on doing complete inspections of mining operations, as opposed to partial inspections, Dickinson said.
The office met its obligation to perform complete inspections at a rate of more than 96 percent, Dickinson said. Those complete reviews would have caught violations or problems that weren't spotted earlier.
Also, if a mining operation causes a significant impact outside its boundaries, citizens usually spot that and complain, and the state checks on the report right away, Dickinson said.
"I don't think we're missing anything major," he said.
However, it's true that with fewer inspections, environmental problems can go on longer before they're spotted, he said.
"It's not a good thing," he said of a reduction in inspections, "because you can miss developing problems."
Dickinson said that since OSM completed its review, his division has hired additional people. The office is now only 10 short of its authorized employee level, he said — not more than 30 as the OSM report noted.
Even with fewer total inspections the last fiscal year, the number of violations state inspectors said they found at surface mines was much higher in the most recent fiscal year than in the year before.
One reason could be the focus on complete inspections, which have the potential to generate more violations.
Dickinson said coal companies also might not have paid close attention to some standards as they pushed for production.
FitzGerald echoed that, saying OSM's review showed that only 77 percent of the mine sites federal regulators visited as part of the review were in complete compliance — the lowest figure since the mid-1990s.
But Bill Caylor, president of the Kentucky Coal Association, said coal companies work to follow the law.
"It is not the corporate philosophy to do anything but fully comply with the law," he said.
There is a debate looming over how best to pay for regulating surface mining.
Industry representatives have talked with state officials about having companies pay higher permit fees so the state could hire more employees to process the complex permit applications.
The state is not meeting the deadline for issuing permits — a concern to the industry because it delays mining, Caylor said.
FitzGerald said the state should go further, however, and charge coal companies high enough fees to cover not only the cost of reviewing permits, but of conducting mandated inspections.
The industry probably wouldn't agree to that. Coal prices are down and it's a difficult time in the business, Caylor said. He suggested that severance taxes generated from mining coal could be used for funding to regulate the industry if necessary.