Division of Environmental Protection
Acid Mine Drainage Bond Forfeiture Report
Submitted To The 1994 Legislature Of West Virginia
December 31, 1993
Division of Environmental Protection
The State has administered a bond forfeiture and/or special reclamation program since before 1959. Operated as two separate programs initially, the programs were combined by an act of the Legislature in 1980, and has functioned since that time as a "bond pool". This action was taken by the Legislature to meet the requirements of the federal Surface Mining Act of 1977 (SMCRA) under which the State was granted, in 1981, primacy to administer its mining and reclamation program. The purpose of the bond forfeiture/special reclamation program was to reclaim and restore mined lands which were abandoned or orphaned by mining companies. Funding for the program arises from three sources: (1) forfeiture of performance bonds posted by mining companies to guarantee compliance with reclamation laws; (2) civil penalty assessments resulting from violations of the law by mining companies; and (3) a special three- cent per ton tax on coal production. The collective fund is characterized under SMCRA as a "bond pool" because monies from the fund are used to supplement expenditures for mine land reclamation where the initial bond posted by the mining company is not sufficient to cover reclamation costs incurred by the State.
Historically, the fund was created and is maintained so that the State, through construction contracts, can restore forfeited mine sites to a safe and aesthetically-pleasing condition. The emphasis has always been on stabilization of drastically disturbed mined lands to prevent landslides and soil erosion. More recently, considerable attention has been focused on prevention and treatment of acid mine drainage from both active and abandoned mine lands. Formation of acid mine drainage at mine sites is a geochemical phenomenon which occurs through the weathering of exposed minerals that naturally occur in the earth and rock overlying coal seams. These minerals, when weathered, form sulfuric acid and high concentrations of iron, manganese, and other dissolved metals which are harmful to life-forms in the streams and rivers of the State. Heightened public awareness of this condition has led many to the conclusion that the State should address the acid mine drainage problems on bond forfeited sites in conjunction with land reclamation. Both state and federal law contemplates that the responsibility for water discharges from these sites are the responsibility of the mining company, even though the company may be in default and its bonds forfeited. Many believe that the law can be interpreted differently, placing the ultimate responsibility for abatement and treatment with the State. Regardless of one's legal point of view, the State clearly is the custodian of the public's water resources, and has a moral obligation to protect these resources from harmful impacts where possible.
Since 1978, the State has encouraged and supported research and development of abatement and treatment technologies to control acid mine drainage. Through a cooperative effort on the part of the State, the federal government, the academic community, and the mining industry, a number of promising techniques have evolved. Some of these technologies are currently being applied by the DEP and the mining industry at various sites throughout the state. Two sites in particular have been operated by the State for several years and data from these sites provide a sound basis for assessing costs of treatment and abatement.
In recognition of the problems associated with acid mine drainage bond forfeiture sites, the Legislature in 1990 authorized the expenditure of up to twenty-five percent of the annual proceeds of the special reclamation fund to be expended for water quality improvement. The Legislature also mandated that all bond forfeiture sites be inventoried and prioritized, and a planning process implemented which would provide for the most cost effective reclamation, while maintaining the integrity of the fund. More recently, the Legislature imposed a requirement that all acid mine drainage bond forfeiture site be similarly inventoried and prioritized. These legislative actions were taken in part because of allegations by some who believe that the fund is insolvent, and that the treatment of discharges from acid mine drainage bond forfeiture sites by the State is required by law.
The inventory and prioritization of bond forfeiture sites forfeited since 1977 (passage of SMCRA) show that over 700 sites have been forfeited. Land reclamation has been completed on eighty-seven percent of these sites. Of the remaining 100 sites, nearly all are under contract or in the reclamation planning process. A recent independent audit and actuarial study of the fund reveal that the fund is solvent and exhibits a trend toward a positive cash flow position over the next five years. The study did not take into account treatment of discharges at acid mine drainage bond forfeiture sites.
Based on several years of experience in treatment and abatement of acid mine drainage, the State Division of Environmental Protection (DEP) developed cost estimates for chemical treatment at all known acid mine drainage bond forfeiture sites. The inventory and prioritization data on these sites show that of the 700 sites forfeited, 98 have acid discharges, and only half of these are severe enough to be affecting receiving streams. This data is based on a study of bond forfeiture sites commissioned by the State in 1988, and expanded after passage of the 1990 legislation. The study not only inventoried the sites, but also collected empirical data on the severity of the discharges and costs for treatment. Although the number of sites affecting receiving streams is surprisingly low, the cost of treatment is prohibitively high. Under the best-case scenario, treatment to neutralization of only the sites affecting receiving streams would require additional expenditures from the fund of $2.6 million for the first year and nearly $2 million each year thereafter. This amount slightly exceeds the twenty-five percent annual income fund limitation for water treatment imposed by law. Under a worst-case scenario where treatment of all discharges will meet federal and state water quality standards, the cost would be $7.4 million initially and $4.7 million annually. More significantly, the long-term liability against the fund would grow geometrically to a maximum of $53 million after five years. This course of action without substantial new revenues to the fund would clearly be fiscally irresponsible.
In preparing this report to the Legislature, the DEP has examined a large body of empirical data and other information in order to assess the financial and environmental impacts of a comprehensive program to chemically treat discharges from acid mine drainage bond forfeiture sites. A number of programmatic approaches have been considered, but are for the most part unworkable. Moreover, this exercise pointed up the inescapable fact that discharges from acid mine drainage bond forfeiture sites are only a small fraction of the overall impact of acid mine drainage to the water resources of the State. The DEP^s Office of Water Resources estimates that seven (7) major watersheds in the state receive nearly 90,000 tons of acid each year from abandoned mine sites not included in the bond forfeiture inventory. Complete treatment of discharges from acid mine drainage bond forfeiture sites will conceivably result in localized improvement in water quality of isolated stream segments. The harsh reality is, however, that these stream segments flow into major tributaries which are grossly degraded by other acid sources, overwhelming and completely nullifying the benefit of treatment to the acid mine drainage bond forfeiture discharges. This kind of piecemeal approach to the acid mine drainage issue is typical of past efforts to address the problem. However, these past efforts have given rise to a vast amount of empirical data and technological development which hasn't been put to use by the State in a strategic and significant way. What is called for is a broad-based strategy which will assimilate the knowledge and experience now available into a program that can deliver tangible improvements in the water quality of the State's most valuable streams and rivers.
The infancy of such a program currently exists within DEP in the form of a Stream Restoration program. The Stream Restoration Committee, supported by a technical sub-committee, now has under construction one project which will restore over five miles of the Blackwater River. Two other projects on the Middle Fork River and Dunloup Creek are in 'the planning stages. Language in the DEP Reorganization Bill, now before the Legislature, establishes the program statutorily. The Committee and technical sub-committee can serve as the vehicle for future planning and implementation. Additional funding will be required to make major advances in water quality improvement. The DEP is recommending to the Legislature that a Stream Restoration assessment of five-cents per ton be placed on coal production in the State. This assessment combined with current revenues will generate over $10,000,000 annually to fund the program. This level of funding will allow the program to rapidly advance to a number of critical watersheds where the benefits of improved water quality will be available to a greater number of citizens.
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