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Cleaning up after coal

GARY — Charlie Miller smiled as he drove his clean, white Jeep across a broad, green plateau atop a McDowell County hill.

Miller pointed out the window at Grapevine Hollow, the former site of U.S. Steel Mining Co.’s two huge coal waste impoundments.

“This was all slurry,” he said.

In early May, state regulators took over the 300-acre site. The main drainage pipe at the larger dam had become plugged, and then burst. Slurry-tainted water poured from the structure’s base into the Tug Fork River.

The entire 500-foot-tall embankment — made of large hunks of waste coal — seemed unstable, and ready to fail.

Department of Environmental Protection inspectors feared a flood. More than 100 homes downstream could have been destroyed.

Since then, DEP officials have spent more than $7.5 million to empty the impoundment and reclaim the site.

Miller, who runs DEP’s special reclamation section, says the project is a major success story.

“I have to look at this with some sense of pride,” Miller said last month. “This shows you what can be done with cooperation and resources.”

But the story of the Gary impoundment also offers a warning, about the dangers of the state’s continued failure to set aside enough money to clean up abandoned mines.

When DEP officials collect the Gary site’s reclamation bond, they’ll pocket just $700,000, less than one-tenth of the project’s cleanup costs. The bulk of the money came from the DEP Special Reclamation Fund.

Under federal law, states are required to keep enough money in the SRF to fully and promptly reclaim all abandoned mines.

West Virginia doesn’t, and it never has. Instead, the fund is millions of dollars short.

A plan that doesn’t comply with the law

Across the state, thousands of acres of abandoned mines sit unreclaimed. Polluted mine discharges poison hundreds of streams.

Earlier this year, the federal Office of Surface Mining approved a Wise administration plan to fix the problem.

But in recent federal court filings, OSM lawyers concede that the plan isn’t really a fix at all.

“There is simply no practical way to guarantee, right now ... that there will always be sufficient money to completely reclaim all future bond forfeiture sites,” OSM lawyers said in a brief filed in late September.

Since 1991, the state has been under OSM orders to “remedy the deficiencies” in its abandoned mine reclamation program. In 1995, OSM ordered the state to put enough money into the fund to clean up “all existing and future” abandoned mines.

In recent interviews, even DEP Secretary Michael Callaghan said that his agency’s plan doesn’t comply with those requirements of federal law.

“If you’re saying are we in violation of the law as we sit here today, I would have to say yes,” Callaghan said last month.

Over the last two years, Chief U.S. District Judge Charles H. Haden II has repeatedly chastised OSM and DEP for not fully funding the abandoned mine cleanup program.

In his harshest criticism, in August 2001, Haden said that the inaction produced “a climate of lawlessness.”

“Agency warnings have no more effect than a wink and a nod, a deadline is just an arbitrary date on the calendar, and once passed, not to be mentioned again,” the judge wrote. “Financial benefits accrue to the owners and operators who were not required to incur the statutory burden and costs attendant to surface mining: political benefits accrue to the state executive and legislators who escape accountability while the mining industry gets a free pass.”

But each time he was asked to step in and force a reform, Haden gave state and federal officials more time to act.

In March, the judge agreed that new OSM and DEP timelines were reasonable. He promised, though, “to hold [OSM officials] to their promises and enforce these dates.”

Now, the lawsuit filed by the West Virginia Highlands Conservancy has reached a critical point.

Conservancy lawyers say that the state’s plan is inadequate. They asked Haden to order OSM to take over abandoned mine reclamation in West Virginia. They want OSM to require every coal company to post a site-specific bond sufficient to cover the cost to reclaim their operations.

Such an order would be a major blow to the coal industry. Full-cost bonds would be far more expensive than the current system, in which reclamation bonds cover a tiny fraction of projected mine cleanup costs.

In its own legal brief, the West Virginia Coal Association warned that such bonds would be hard for coal operators to get. The association cited “a substantial tightening in the underwriting of risks” in the insurance industry following the September 2001 terrorist attacks.

All sides have filed their legal briefs. They’re waiting for the judge to rule.

Two ways to cover reclamation costs

In the 1970s, the McDowell County town of Gary was home to what may have been the largest coal preparation facility in the world. U.S. Steel Mining operated the Alpheus coal cleaning plant, named for the Greek river god.

To dispose of huge amounts of waste coal, rock and slurry, the company built a pair of impoundments on Grapevine and Adkins branches, just north of Gary toward Welch.

In the mid-1980s, U.S. Steel Mining closed the operation. The impoundments sat idle, full of millions of gallons of slurry.

At least twice during the next 15 years, new companies tried to find a way to make money recovering an estimated 10 million tons of small coal-waste particles, called fines, from the impoundments. None of the schemes really worked very well, and some left the site in worse shape than when they started.

Starting in March 1999, DEP inspectors cited the operation for a series of monitoring, drainage control, and reclamation violations. In March 2002, one agency engineer warned that the impoundments could be at risk of “catastrophic” failure, state records show.

When it passed the Surface Mining Control and Reclamation Act in 1977, Congress intended to eliminate such threats. Played-out or abandoned mine sites were required to be reclaimed.

Under the law, states are allowed to regulate their own coal mining industries. Congress created OSM to make sure that states force mine operators to comply with SMCRA.

Among other things, SMCRA requires states to make coal companies post reclamation bonds before they receive new mining permits. The idea was to make sure that mines abandoned after 1977 were cleaned up properly. Older mines that were abandoned before 1977 are cleaned up with a separate pool of money from a federal coal production tax.

Under federal rules, states may adopt one of two types of bonding systems.

One type requires companies to post bonds that would cover the full cost of reclaiming their mine sites. If companies go belly up, they forfeit their bond. States use the money to clean up the sites.

The other type allows companies to post smaller bonds, in amounts that do not cover full reclamation costs. But state regulators are still required to maintain enough money in a fund to reclaim any sites that companies abandon. West Virginia attempts to do that with a small tax on coal production, and with money from environmental fines for coal industry violations.

More than 300 abandoned sites

Today, U.S. Steel Mining’s huge coal conveyor belt still towers over W.Va. 103 outside Gary.

An engineer working for Miller’s DEP special reclamation group examined the structure. When he found it wasn’t about to collapse, the beltline project was filed away, added to a growing backlog of more than 300 abandoned sites the state needs to reclaim.

In 1989, OSM first acknowledged that the state’s special reclamation program was underfunded. At the time, federal officials said the program was about $2.4 million short.

Since then, that money required by the special reclamation fund has skyrocketed. The most recent OSM reports, filed in federal court, quote these figures: on-site land reclamation costs of $48 million to cover a backlog of abandoned sites, and $46 million annually for water treatment at those sites.

A 2000 OSM report — which the agency now disavows and DEP harshly criticizes — found that water treatment costs are likely to be $53 million a year for the next 50 years, or $2.6 billion.

‘I’m not saying I hit a grand slam’

In 1981, OSM gave West Virginia approval to regulate its own mining industry. That approval was based on several conditions. For one thing, the state was required to submit to OSM a study to show that the special reclamation fund would contain, “on a continuous basis, enough money to meet the demands placed upon it.”

A year later, the state submitted only a preliminary study, and OSM accepted it. Three years later, in a 1986 report, the U.S. General Accounting Office said that the state study was worthless. In 1989, OSM acknowledged that the state’s special reclamation program was in trouble. In 1991, the Interior Department inspector general reported that the state was trying to cover up a huge deficit in the special reclamation fund.

In 1991 and again in 1995, OSM ordered the state to fix the problem. The state ignored the orders, and OSM did nothing about it, records show.

In June 2001, faced with the conservancy lawsuit, OSM again ordered the state to fix the reclamation fund.

Initially, Callaghan proposed to increase the state’s special reclamation tax from 3 cents per ton of mined coal to 23 cents per ton. Callaghan also proposed that the state lift its $5,000-per-acre cap on reclamation bonds.

Callaghan proposed that plan in May 2001. By early August, he had backed off. Coal industry officials opposed the plan. Legislative leaders wouldn’t go along without industry agreement. Gov. Bob Wise wouldn’t call a special session without support from legislative leaders.

After private meetings with coal industry lobbyists, Callaghan proposed a different plan.

This one would increase the special reclamation tax to 14 cents a ton for about three years. Then, it would drop back to 7 cents a ton. The new plan kept the state’s $5,000-per-acre cap on bonds. Lawmakers approved the plan, and Wise signed it into law.

“Maybe that’s not enough,” Callaghan said of his proposal. “I’m not saying I hit a grand slam in the bottom of the ninth to win the game, but I think we have moved this issue pretty far.”

In a report on the state’s plan, OSM concluded that it would eliminate the reclamation program deficit within three years. The program would remain solvent for nine years after that, but then would fall into the red again, OSM analysts concluded.

In its own report submitted to OSM, the conservancy outlined numerous flaws in the state plan. Most importantly, the group’s experts found many areas where the state underestimated potential reclamation costs:

  • OSM accepted a DEP estimate of acid mine drainage treatment costs that was based on low stream flow during the driest months of the year.

  • The DEP plan’s water treatment costs did not include the price to actually make mine discharges clean enough to comply with water pollution limits.

  • OSM used historic per-acre land reclamation costs, which typically involved minimal work such as knocking down dangerous highwalls and planting grass. True cleanups, to meet original reclamation plans, would be much more expensive.

  • Neither DEP nor OSM considered what would happen if a large mining company with multiple operations went bankrupt and abandoned their sites.

  • The agencies did not estimate the potentially huge costs of cleaning up an abandoned mountaintop removal site, or meeting new mountaintop removal reclamation rules.

    Despite these issues, OSM approved the state’s plan in late May. At the time, agency officials said that the plan might not be perfect, but is the best that either they or DEP could come up with.

    Creation of an adequate bonding system, OSM officials said, is “infeasible” and “impossible” in states like West Virginia, where long-term acid drainage has been created by coal mining operations.

    “Quite simply, the plan approved by OSM offers the best chance that the fund will become solvent and continue to address land and water reclamation needs of the state,” OSM lawyers said.

    Conservancy lawyers replied that OSM has approved a state plan “that will marginally improve the financial condition of the SRF, even though it does not eliminate the deficit, does not protect the state from future liabilities, and does not comply with SMCRA.”

    ‘We were scared to death it was going to break loose’

    On a warm fall afternoon last month, the green grass on the reclaimed Grapevine Hollow impoundments almost glowed. Trees on the McDowell County hillside were dotted with yellow and orange leaves.

    At the toe of the reclaimed impoundments, rock-lined channels direct a slow trickle of runoff. Grass has grown up on the embankment.

    Six months ago, the area didn’t look anything like this.

    “The slurry and sludge were above our knees,” said David Martin, a DEP special reclamation engineer.

    On the night of May 2, heavy rains overwhelmed runoff control systems at the impoundment. The next day, DEP inspector Arnold Fortner spotted slurry from the impoundment pouring into the Tug Fork. A team of DEP officials, including Cal-laghan and agency mining director Matt Crum, hurried to the scene.

    By noon on May 3, Callaghan and other DEP officials became convinced that the current operator, Antaeus Gary Project Inc., could not get the impoundment under control.

    “We were scared to death it was going to break loose,” Callaghan said.

    Callaghan took over the site, and told Miller he wanted it cleaned up by the end of September. Crews finished on Sept. 26.

    The impoundments were the biggest project ever handled by Miller’s team. The price for that one project — $7.5 million — was about equal to the average of what special reclamation has spent in each of the last five years.

    Taxing 14 cents or $5 a ton?

    Last month, Callaghan said that he hopes the Gary impoundments are the last ones his special reclamation program ever has to deal with.

    “That whole thing, I have a lot of mixed emotions about,” Callaghan said last month. “I’m glad we got it done, and did a good job.

    “But we shouldn’t have had to do it in the first place, and we shouldn’t have had to pay for it.”

    Callaghan says that he hasn’t gotten appropriate credit for his efforts to fix the reclamation fund. In particular, he says, his critics ignore the creation of an “advisory council” to monitor the fund’s financial stability and recommend reforms.

    “If the advisory council does its job and recommends an increase [in the reclamation tax], and the Legislature adopts it, then this program will work,” Callaghan said.

    Since the day he started at DEP, Callaghan has called the abandoned-mine cleanup crisis the biggest environmental issue facing the state.

    He has also made it clear that he lacked the support of state political leaders to do much more about it.

    “It’s terribly troublesome,” Callaghan said. “You start looking at the numbers, and it makes you look long and hard at that 14 cent tax. You might have to increase that.

    “If I could, I would make it $5 a ton,” he said.

    “I would, until we could get this thing paid off.”

    To contact staff writer Ken Ward Jr., use e-mail or call 348-1702.


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