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LOUISVILLE, Ky. — As the coal industry has collapsed in Kentucky, companies have racked up a rising number of violations at surface mines, and state regulators have failed to bring a record number of them into compliance, internal documents show.
Enforcement data from 2013 through February, along with recent internal emails, both provided to Inside Climate News by the Kentucky Energy and Environment Cabinet in response to a state open records law request, paint a picture of an industry and its regulators in a state of crisis.
The documents reveal an agency struggling to enforce regulations designed to protect the public and the environment from some of the industry’s most destructive practices amid mining company bankruptcies and an overall industry decline that has also seen the shedding of thousands of coal mining jobs in the state.
Environmental advocates fear lax enforcement could also be happening in other coal mining states, such as West Virginia, Virginia and Pennsylvania, due to similar pressures on the industry and regulators, despite a recent uptick in coal mining. And they are calling on federal regulators to make sure slowed, idled or bankrupt mines are not left to deteriorate.
“This data shows there are a lot of zombie mines out there,” said Mary Varson Cromer, an attorney and deputy director of the Appalachian Citizens’ Law Center Inc., in Whitesburg, Kentucky, using a term that refers to mines that have been idled, sometimes for years, without the required reclamation work on their sites.
In one Dec. 15 email, a state official noted that the number of notices of noncompliance with surface mining regulations statewide had reached a record high of 810 the previous month. The increase came even though the number of active mining permits had declined 28 percent since 2013, a year when there were roughly half as many unresolved violations despite more mining activity.
“This is completely out of control,” warned Courtney Skaggs, a senior environmental scientist in the Kentucky Department for Natural Resources, in a separate Dec. 15 email to the department’s commissioner, Gordon Slone. “This is going to blow up in someone’s face,” wrote Skaggs, a former acting director of the agency’s Division of Mine Reclamation and Enforcement.
That same day, Skaggs wrote to John Lyons, the deputy secretary at the Kentucky Energy and Environment Cabinet, which oversees environmental regulations in the state.
“You once told me to come to you if I saw a problem,” Skaggs said. “I would rather sit down and talk through this, but in the interim, look at this data. There are a lot of variables, including the massive decline in coal production, but what we are doing right now is not addressing the problems. Something has to give/change before we have a major problem on our hands.”
Skaggs declined a request for comment, saying cabinet policy was for all communication to go through John Mura, the cabinet spokesman.
The enforcement data can be explained by “an unprecedented number of bankruptcies caused by market forces in the coal industry that are outside of the control of (the cabinet),” Mura said in a written response.
The cabinet remains obligated to inspect mines and write violations, “whether there is a viable permittee or not,” he said. Most of the violations will remain unabated until another mine operator can be found for an idled mine, or the mine has been reclaimed, he said. If a violation represents an imminent danger, he wrote, the cabinet “seeks immediate enforcement.”
Less Teeth in Enforcement
The skyrocketing number of non-compliance notices flagged in mid-December by Courtney Skaggs did not improve over the next two and a half months. At the time she sounded the alarm inside the energy cabinet, she accused the current director of the state’s Division of Mine Reclamation and Enforcement, Jim Ward, of “not trying to fix it.”
As of the end of February, regulators were counting even more unresolved notices of non-compliance, 817 in all, according to data provided by the energy cabinet in response to the open records law request.
Such notices can include multiple violations of performance standards that mining companies are supposed to follow, which can range from environmental monitoring to the stabilization of cliffs left behind by blasting, Cromer said. The data from the state showed a total of 1,219 violations of all performance standards as of the end of February.
“My overall sense is as coal production has declined, the agency has less and less teeth in its enforcement,” said Cromer, the citizens’ law center attorney. “The primary stick of its enforcement mechanism is the permit block,” she said, explaining that that’s where the state will prevent violators from getting new mining permits if they have unresolved violations on current mining permits.
“The state can keep writing violations,” Cromer said. “To the extent these companies aren’t interested in getting new permits, they don’t care.”
Cromer said she’s also frustrated at what she described as the slow pace of the state’s negotiations with insurance companies that hold bonds intended to cover the cost of reclamation for mining companies that have gone bankrupt.
“I see a cascade coming” if state regulators can’t move more quickly and more companies file for bankruptcy, she said.
Tucker Davis, president of the Kentucky Coal Association, did not return an email and voice mail requests for comment.
Mura said cabinet officials share Skaggs’ frustration with “the laborious and lengthy process” involved in reaching agreements with insurance companies to resolve violations and reclaim mines.
He said that officials believe the state is “best-served” when employees feel “empowered to bring anything to light that they feel might impact the health or safety of workers or residents.”
Mura also said that those officials have “full confidence in Division of Mine Reclamation and Enforcement Director Ward’s ability to address the many issues presented by the multitude of coal bankruptcies.”
Strip mining in Central Appalachia rips forests from the ground and uses dynamite to blast the tops and sides of mountains away to get at coal buried hundreds of feet beneath them. Companies are supposed to follow certain regulations to reduce the effects of this violent process that leaves the land permanently altered.
State regulators are overseen by the federal Office of Surface Mining Reclamation and Enforcement (OSMRE), a branch of the Interior Department.
Companies are also supposed to reclaim mine sites contemporaneously, as they are mining new areas. Reclamation can consist of backfilling and grading a mined area, eliminating unstable “high walls” and mine waste, planting grass or trees, and managing and treating water that runs off the site, which can be toxic. The federal Surface Mining Control and Reclamation Act of 1977 generally requires that mined land be returned to its approximate original contour.
The law also requires coal mining companies to secure bonds to cover the costs of reclamation should the companies go bankrupt. In Kentucky, the state also operates a shared-risk bond pool funded by fees on the industry to cover reclamation costs if the mining company bonds fall short.
In Kentucky, more than half of the unresolved violations are on mines that were operated by companies that have gone bankrupt, including Ember Energy, Blackjewel and Revelation, which was owned by Blackjewel, according to state officials.
Thirteen months ago, a federal bankruptcy judge set the stage to allow Blackjewel, once the nation’s sixth-largest coal producer, to walk away from cleaning up and reclaiming more than 30 coal mines in Kentucky, with dozens more across the region facing the risk of abandonment.
Negotiations with the Indemnity National Insurance Co. regarding a number of Blackjewel and Revelation permits began in April 2020 and are ongoing, as are negotiations that began in March 2021 with Lexon Insurance Co. regarding an Ember permit, Mura said. “No final agreements have been reached yet,” Mura said.
At least one Kentucky landowner who leased property to a mining company that went bankrupt is growing impatient.
On Tracy Neece’s property in eastern Kentucky’s Floyd County, Revelation, the bankrupt Blackjewel company, left behind nearly two miles of unstable rock-faced cliffs that Neece estimates are as high as 250 feet. Records show the state had cited the company between 2016 and 2019, the year the company declared bankruptcy, for failing to maintain proper drainage to control sediment runoff and to properly manage waste rock, called mine spoils, that had been blasted from the hillside.
Neece shared his story with Inside Climate News and The (Louisville) Courier Journal last year. Last week, Neece, who is represented by Cromer, said state officials still have not required any reclamation.
“They’ve done nothing yet,” Neece said, adding that he recently complained to state officials about new drainage problems, only to be told that “something would have to be really bad” for the state to require a fix by the insurance company.
“They said they wouldn’t do anything unless it was life-threatening,” Neece recalled. Frustrated, he added: “I guess a boulder would have to come down and hit a house before they’d do anything.”
Surging Reclamation Liability
Peter Morgan, an attorney with the Sierra Club who is closely tracking coal bankruptcies nationally, sees two potential explanations for Kentucky’s lackluster enforcement.
For companies that are still operating or are idled but not bankrupt, Morgan said, they could be in financial distress and not keeping up with their regulatory requirements. At the same time, he said, state officials could be concerned that if they are too aggressive, they could push the companies into insolvency.
With companies already bankrupt, the state regulators are behaving as if they don’t have enough money through either surety bonds or the state’s shared bond pool to fully cover the costs of reclamation, Morgan said.
“If the money was there, then the cabinet would have a free hand to complete bond forfeiture and hire contractors to do the work directly,” Morgan said. “The only reason I can see that the cabinet hasn’t gone this route is because the cabinet knows that the sureties don’t have the money to pay out the full bond amounts, and the bond pool doesn’t have the funds to make up the difference.”
In his written response, Mura said the cabinet has an obligation to provide bondholders with “the opportunity to demonstrate the ability to complete the reclamation plan within a reasonable timeframe.”
However, the money looks tight.
Overall, Kentucky’s reclamation liability ranges from $1.9 billion to $2.4 billion, compared to companies’ bonds of about $888 million, according to a July 2021 report by Appalachian Voices, an environmental group. Similar shortfalls exist in other coal states.
On Neece’s property alone, the state estimated the cost for reclaiming more than 300 acres to be $10 million, according to records filed in bankruptcy court. The state only required about $1.7 million in reclamation bonds.
An actuarial report on the state’s bond pool fund from July 2021 found that it would remain viable for at least three years. But it also found that the “primary risk of the current bonding program … is that the generated financial resources are not sufficient to cover actual future losses. As a result, the lands could sit awaiting reclamation for years.”
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The U.S. Energy Information Agency forecasts coal production nationally rising 7 percent this year and 2 percent next year, driven in part by increasing exports and refilling power plant inventories that were depleted during the pandemic. In Kentucky, production rose 12.6 percent during the fourth quarter of 2021 compared to the same period in 2020, after declining sharply over the previous decade.
Kentucky still has about 20 percent of all coal mines in the country, third-highest behind West Virginia and Pennsylvania, according to the agency.
But with the Biden administration working toward a goal of eliminating carbon emissions from electricity generation by 2035, and more than 40 countries pledging to phase out coal to meet climate goals, the fuel’s long-term future remains in doubt.
More than ever, the Biden administration needs to make sure surface mining regulation and reclamation laws are enforced, Morgan said. That will be more difficult right now, he said, because the White House has yet to nominate someone to lead the federal Office of Surface Mining Reclamation and Enforcement, well over a year after President Biden took office.
The White House press office did not respond to a question about the vacancy, and OSMRE did not respond to questions about Kentucky’s enforcement record.
“The coal mining industry is going through an unprecedented crisis,” Morgan said. “To have a leadership vacuum at the top of the federal regulator at this time is disappointing and problematic. The state agencies need to respond. There also needs to be a coordinated federal response.”