With ominous mine reclamation liability, West Virginia looks to federal dollars

West Virginia lawmakers are aiming to draw down millions of federal dollars to help assuage the increasing possibility that mine reclamation costs could spiral out of control and swamp the state budget.

During interim meetings last week, legislative leaders agreed to establish a Joint Committee on Mine Reclamation. Its mission is to establish a plan to access federal stimulus money for mine reclamation and report back by June 25.

The Biden administration has made clear that it has identified hundreds of millions of dollars meant to revitalize coalfield communities and to bolster employment while also improving the environment.

West Virginia lawmakers see yet another need: economic support for the increasingly perilous problem of mine reclamation.

Funding for mine reclamation in West Virginia has become such a question that environmental groups including the Sierra Club filed a federal lawsuit last month aimed at pressuring the federal government to intervene.

This past week, lawmakers had just heard the summary of a 52-page report laying out the likelihood of mine reclamation as a budget bomb when Senate President Craig Blair proposed getting into position for a federal lifeline.

Blair noted that the White House Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization has identified nearly $38 billion in existing federal funding that could be accessed for infrastructure, environmental remediation, community revitalization, and jobs to support hard-hit energy communities.

He alluded to a conversation with U.S. Energy Secretary Jennifer Granholm, who visited West Virginia this month with Senator Joe Manchin, D-W.Va., chairman of the Senate Energy Committee.

“I brought up, when they were asking how they could help, I brought up this issue. We need to take it, repackage it and go back to them,” said Blair, R-Berkeley.

“We need to repackage this together in such a way that we can utilize some of them. Otherwise, we’re looking at a billion-dollar problem of our own.”

The day after Blair’s remarks, West Virginia’s Joint Committee on Mine Reclamation was approved.

Its urgency was laid out as a snowballing problem in a report by the West Virginia Office of the Legislative Auditor. In short, West Virginia is subject to federal requirements to have enough money available to complete reclamation for any areas where permit holders default.

West Virginia allows mining companies to post bonds of $1,000 to $5,000 an acre, amounts that the Department of Environmental Protection estimates would cover only about 10 percent of reclamation costs. West Virginia fills the gap with what it calls Special Reclamation Funds, which are are funded primarily by a 27.9 cent tax levied on every short ton of coal produced.

But increased reclamation costs combined with economic strain on the coal industry has highlighted the possibility of a financial crisis.

An organization called the Special Reclamation Fund Advisory Council projects liabilities for permits already in existence to be $496.7 million over the next twenty years.

“West Virginia’s coal mining reclamation program will continue to require hundreds of millions of dollars to reclaim permit sites in accordance with federal regulations,” the legislative auditor’s report concluded.

“The program has no known contingency plans if the reclamation funds were to become insolvent. If the current funding sources for the program were to prove insufficient to meet the demands of reclamation, the resulting additional financial obligations could prove to be detrimental to the state’s budget.”

One big worry is the number of coal companies that have gone bankrupt in recent years. Six publicly-traded coal companies holding 52 percent of the permits and 59 percent of the mines in the state declared bankruptcy between April 2014 and January 2016, the report noted.

“The most obvious effect on the Special Reclamation Funds is the presumption that companies going through bankruptcy are the most vulnerable financially,” the report stated.

“The largest companies have been able to reorganize or sell off assets and re-emerge from bankruptcy. However, the large number of sites going through multiple companies and/or bankruptcies is a potential indicator that these sites may not be sustainable long-term.”

Blair, in his remarks to fellow lawmakers, blamed federal climate change policy for that strain on coal producers. But he said the federal government could be responsible for a solution too.

“The federal administration has put us in this position where fossil energy is where it’s at today,” he said. “So we need to be able to take your report, repackage it in such a way that we can actually put that on Secretary Manchin’s desk, the Secretary of Energy’s desk and anybody else.”

President Biden’s infrastructure proposal, called the American Jobs Plan, proposes spending $16 billion to plug old oil and gas wells and clean up abandoned mines.

Besides that, a White House-appointed group aiming at revitalizing coal communities identified $38 billion from existing federal funds to revitalize communities. That’s the money that caught Blair’s attention.

Part of that is $152.2 million in annual reclamation grants from the Department of Interior’s Office of Surface Mining, Reclamation and Enforcement.

The White House Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization named 25 areas that need help. Five of those constitute big swaths of West Virginia.

Federal leaders have described the funding boost not only in terms of cleanup, but also in terms of jobs.

Jennifer Granholm

While on MetroNews’ “Talkline,” Granholm spoke of the effort to help coal communities come back.

“We have identified $38 billion that are available to these 25 coal and power plant regions, and I’d say 80 percent of West Virginia is in that bucket,” Granholm said.

“We are determined to leave no one behind. But I hear what you’re saying. People who have felt like they have been left behind or made promises to or haven’t been fulfilled, I get it.”

An earlier report by the United Mine Workers, “Preserving Coal Country,” included a section about the possibility of increased jobs from reclamation work:

“Fully-fund all anticipated Abandoned Mine Lands reclamation needs, require states to aggregate contracts for AML reclamation and require prevailing wages so that union contractors can successfully compete for those contracts.”

Blair last week described reclamation work as a sensible transition for coal miners who have lost jobs.

“Displaced miners don’t need a whole lot of retraining to get back in and do reclamation. It’s a win-win scenario from that standpoint,” he said.

Blair turned to House Speaker Roger Hanshaw to see if he agrees.

“I’m looking for anything that puts our people on the payroll,” Hanshaw said.

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