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Reports: DEP mine cleanup program unfunded, mismanaged

CHARLESTON, W.Va. -- As this year's legislative session begins, a state advisory council is again urging lawmakers to increase a coal production tax that funds abandoned mine cleanups and a scathing new audit says mismanagement by the Department of Environmental Protection could leave the state responsible for "immense amounts of monies" for reclamation.

Investigators from the Legislative Auditor's office found DEP did not have accurate data on abandoned site cleanup costs, consistently miscalculates necessary reclamation bond amounts, and often does not complete required inspections of abandoned mine sites.

Auditors also reported that the state is at risk of losing tens of millions of dollars in unsecured reclamation funding if companies and their insurers go belly up.

"Most of the issues identified in this report result from inadequate record-keeping, poor or non-existent internal controls, and a lack of oversight on the part of the DEP," auditors said in a 137-page report.

DEP officials disagreed strongly with the audit findings. They argued auditors misunderstood the complex nature of insuring mine reclamation, exaggerated minor data discrepancies, and blamed agency officials for procedures required by state law.

At the same time, an actuarial report prepared for DEP's own Special Reclamation Advisory Council shows growing financial problems in the mine cleanup program.

Increased costs associated with properly treating water pollution at abandoned mines across West Virginia's coalfields could easily push the program's water treatment fund into deficit by 2020, according to a draft actuarial study issued last month.

Pinnacle Actuarial Resources Inc. recommended increasing the state's special reclamation tax on coal production from 14.4 cents per ton to 34.91 cents per ton to avoid insolvency.

Advisory council members, including representatives from industry and environmental groups, stopped short of that recommendation -- instead asking lawmakers to increase the special reclamation tax to 27.9 cents per ton, with the entire 13.5 cents per ton earmarked for future water pollution treatment.

At issue is DEP's Special Reclamation Program, which is charged with cleaning up coal mines abandoned since passage of the 197 federal strip-mining law.

Historically, the fund has been short of money because coal operators had not posted reclamation bonds sufficient to cover the true cost of mine cleanups at sites that are abandoned. A state tax on coal production was never set high enough to make up the difference.

The problem dates back to the 1980s, when the state first obtained approval from the federal Office of Surface Mining Reclamation and Enforcement to run its own strip-mining program under the 1977 law.

The late U.S. District Judge Charles H. Haden II had chastised regulators for failing to fix the problem, saying they had created a "climate of lawlessness." But Haden declined to step in after then-Gov. Bob Wise's administration increased the reclamation tax and created the advisory council to guide DEP and the Legislature in ensuring adequate funding for mine cleanups.

The financial problems are only expected to get worse, especially after environmental groups successfully sued DEP to force the agency to improve water pollution treatment practices at abandoned mine sites.

Last March, lawyers for the West Virginia Highlands Conservancy sought to reopen their lawsuit, which seeks to force OSM to take over the state reclamation program and force reforms.

Conservancy lawyers acted only after lawmakers ignored the DEP advisory council's recommendations to increase the mine cleanup tax, following a letter in which DEP Secretary Randy Huffman opposed the council's plan.

Like Haden, U.S. District Judge John T. Copenhaver Jr. has publicly criticized the state's inaction, but so far Copenhaver has not ruled on the motion to reopen the lawsuit.

This year, the administration will support the advisory council proposal, said Kimberly Osborne, press secretary for Gov. Earl Ray Tomblin. Osborne noted that advisory council member Bill Raney, president of the West Virginia Coal Association, voted in favor of the recommendation.

"Although [Tomblin] does not believe that we need to be increasing taxes and he does not believe we need to be placing additional unnecessary burdens on the coal industry, he is supportive of the recommendation," Osborne said in an e-mail message. "By increasing this fee, we will maintain the integrity of our current bonding system, support the special reclamation fund, and the citizens of this state will not be threatened by general tax increases on this issue."

Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.


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