"I'm glad that we have the resources available and a program set in place to handle such actions." Taxpayer liability At least 10 years before Miano's news release, OSM had warned the state that it didn't have adequate resources to reclaim abandoned mines.
In a 1989 report, OSM investigators said that the state mistakenly assumed that it cost $1,000 per acre, or the amount companies posted in bonds, to clean up abandoned mines. At the time, DEP spent about $2,000 per acre for land reclamation at abandoned sites.
By 1991, OSM ordered the state to come up with a plan by October 1995 to fix its bonding program.
October 1995 came and went. West Virginia regulators did nothing, and OSM did little to force the state to act.
In November 2000, lawyers for the Highlands Conservancy asked Haden to step in.
"The special reclamation fund does not have sufficient funds to treat or otherwise permanently abate the discharge of mine drainage pollutants from existing unreclaimed sites into State streams," conservancy lawyers said in a 22-page lawsuit.
Earlier this year, the judge dismissed DEP from the case because of a technicality over court jurisdiction.
But in the same order, Haden said that federal laws that require an adequate bonding program have been ignored for years in West Virginia.
"The results are obvious: An immense state liability incurred by the mine operators, but borne by the taxpayers, and ongoing pollution of the state's streams," Haden said in a May 29 opinion.
Toxic waste pile In the end, Royal Scot had posted about $2 million in bonds for 34 permits in the Anjean area.
Some DEP estimates put the reclamation cost for the sites at more than $6.5 million.
But the agency's Roger Green says the solution could actually cost more like $25 million.
The site's real problem is a 40-acre coal waste pile. It towers over the mine site, and runoff from it contains the toxic acid that would kill Little Clear Creek's trout. DEP officials figure there is about 3.5 million tons of coal waste in the pile.
"There is a lot of runoff," Green said. "When we get a couple of inches of rain, you could literally put a kayak in this drainage ditch." Green says that the state could leave the waste pile there, cover it up with dirt and grass, and continue to treat the acid runoff.
That's not an attractive option, he said. The state would have to keep staff on site and spend money on the site basically forever.
Green would rather remove the pile, or mix the toxic material in it with some sort of neutralizing agent. Theoretically, the toxic runoff would end. Then, the state could plant grass and trees.
Even once that's done, the site is littered with old mining equipment and a dilapidated preparation plant. Those need to be cleaned up as well.
'No end in sight' In May, Callaghan took the stand in Haden's courtroom to testify about the bond program's problems.
"The problem is [that] over time, the 3-cents-per-ton that was generated ... was not sufficient to allow the state to reclaim the sites that were forfeited by various coal operators," Callaghan told the judge.
"The state of West Virginia has essentially incurred a debt over a significant period of time to the point right now whereas we sit here with no mechanism to fix the sites that are already forfeited out there, and with no end in sight to getting enough money in that fund to fix what is already out there." In one report, DEP said the state needs $27.8 million to do land reclamation at about 300 previously abandoned mine sites. In another, the agency said it needs $20 million for one-time capital costs for water treatment at abandoned sites. Plus, those sites require a total of $1.4 million a year for water treatment.
On top of that, the state spends about $1.5 million to treat water at five abandoned sites.
Last month, Callaghan gave legislators his "20-20 Plan" to fix the problem. The cap on per-acre bonds would be increased to $20,000 an acre. The reclamation tax would be increased 20 cents per ton, to 23 cents per ton.
Matt Crum, Callaghan's mining and reclamation director, said the proposal was sure to do the job.
"Absolutely. There is no question that we would have sufficient funds to take care of the problem," Crum said. "Our guys have crunched the numbers." Here's how Callaghan figures it would work: If West Virginia produces 170 million tons of coal a year, the increased tax generates nearly $40 million a year. (The state produced that much coal in 1997 and 1998. Annual production dropped to less than 160 million tons each year since then, according to the U.S. Department of Energy.) The state's bond fund has a balance of about $8.9 million. DEP has another $1.1 million in outstanding bonds to collect. That adds up to $10 million. Add that $10 million to the $40 million generated by the increased reclamation tax, and the bond fund's deficit goes away.
Charlie Miller, chief of DEP's special reclamation unit, said the $40 million a year would be more than enough to reclaim any sites that are abandoned down the road.
DEP projects that the state only needs about $11 million a year to clean up future abandoned sites, Miller said.
Miller said DEP believes that, in the future, about 10 percent of mining permits will be abandoned by their operators.
No report or study has been written to explain where the 10 percent estimate comes from, Miller said.
"That's talking about what will happen in the future, and that's always a real difficult job," Miller said last week. "We sat there and did the calculation, and we put them on just a piece of paper." Last year, OSM published a series of reports by a consultant, Tetra Tech.
In an August 2000 report, Tetra Tech noted that about 460 nonabandoned mine sites in West Virginia currently require acid mine drainage treatment.
Tetra Tech projected that at least a third of those sites will be abandoned at some point.
Over the next 50 years, water treatment at those sites will cost more than $2.6 billion, or about $53 million a year, according to Tetra Tech.
If more than a third of those sites are abandoned, water treatment will cost even more. If all those sites are abandoned, water treatment will cost more than $6 billion over 50 years, Tetra Tech projected.
Miller of DEP said he hasn't seen the Tetra Tech reports.
The '20-20 Plan' When he testified in Haden's courtroom, Callaghan strongly pushed for his "20-20 Plan." "Back in my briefcase, I have got a legislative proposal to raise the bonding to $20,000 an acre and put 20 cents per ton of coal to fix this problem, and that's setting in my briefcase," Callaghan said.
"And I'm working closely with [House] Speaker [Bob] Kiss and [Senate] President [Earl Ray] Tomblin in discussing the possibility of calling a special legislative session within the next month or two months to address this very serious issue." That was in May. Soon afterward, Callaghan backed off. Coal industry officials opposed his plan. Legislative leaders wouldn't go along without industry agreement. The governor wouldn't call a special session without support from legislative leaders.
In an interview two weeks ago, Callaghan said his plan was far too ambitious.
"When you start talking about a liability that built up over 20 years, and paying it off over a year, that is pretty rapid payback," Callaghan said.
On Thursday, Callaghan announced a deal with the coal industry.
Through April 2005, the reclamation tax would be increased to 14 cents per ton. After that, it would drop to 7 cents per ton.
The 14-cent-per-ton figure would raise about $23 million a year. In a news release, DEP said that OSM had "given its tentative approval" to the deal.
"This agreement will resolve a longstanding bonding problem, and end the threat of a takeover of our agency," Callaghan said. "This has been a problem for at least 12 years, and I am glad we finally found an appropriate solution." Roger Calhoun, director of the OSM Charleston field office, told the state that the deal "should be adequate to remedy the existing land reclamation deficit and to treat pollution discharges from existing bond forfeiture sites" through 2005.
After that, Calhoun said in a letter, "it appears that the tax rate of 7 cents per ton may only be adequate for a few years."
Abandoned lands and polluted waters
Maps, permit lists and photos
Read the West Virginia Highlands Conservancy's lawsuit against regulators over the mine reclamation fund deficit.
Other documents from the lawsuit:
Other related documents:
Download the Tetra Tech study which estimates the potential future cost of water treatment at abandoned mine
Read other acid mine drainage reports prepared for OSM by visiting the agency's web site.
Read the OSM federal register notice opening the public comment period on Gov. Wise's reclamation bond proposal.
Read the bill passed by the Legislature to implement the reclamation bond proposal.
Read an OSM analysis of the state's proposal to fix the reclamation fund.
(Adobe Acrobat required for .pdf files)