Kentucky Coal Companies Fight Bond Increases for Mine Cleanup

FRANKFORT, Ky. (CN) – A coalition of Kentucky coal companies sued U.S. Interior Secretary Ryan Zinke over the disapproval of state regulations related to protecting water quality at mining sites, claiming it will unfairly increase the amount of money collected to fund the cleanup of abandoned mines.

The Kentucky Coal Association sued Zinke and the acting director of the Office of Surface Mining Reclamation and Enforcement on Thursday in Frankfort, Ky., federal court. The group wants a judge to review Zinke’s January decision to disapprove certain amendments to the state’s bonding program for the long-term treatment of polluted water at former mine sites.

Zinke announced the changes in a final rule published in the Federal Register on Jan. 29.

According to the lawsuit filed by lead attorney Richard Larkin of Bingham Greenebaum, the change to the program means that coal companies in the state will pay more to fund bonds to cover the costs of treating water for pollution. The Interior Department said the rule would go into effect on Feb. 28.

“Kentucky has adopted a regulation to ensure the protection of water quality at mining sites. The regulation codifies a policy Kentucky has consistently applied for twenty years, and which the secretary…has expressly and implicitly approved,” the complaint states. “Yet on Jan. 29, 2018, without warning and without legal or factual support, the secretary reversed course and disapproved the regulation.”

A reclamation bond is supposed to assure that public land is reformed after a mine closes down. Companies must post the bond before they can get a mining permit.

In its decision, the Office of Surface Mining Reclamation and Enforcement took issue with Kentucky’s amendment stating that the bond amount will be based on the estimated annual treatment cost, multiplied by 20 years.

“Neither [the Surface Mining Control and Reclamation Act] nor its implementing regulations allow regulatory authorities to set arbitrary time limits as multipliers for calculating bond amounts. Kentucky has not demonstrated that a 20-year multiplier will result in an adequate bond,” the decision states.

Calling state law “less stringent” than federal regulations, the office also said that allowing a remediation plan in lieu of an adequate bond for long-term treatment is “unacceptable.”

“We recommend that Kentucky avail itself of these alternative financial mechanisms to ensure adequate funds are available to fully cover the cost of reclamation,” according to the decision.

The Kentucky Coal Association says the changes will create uncertainty in the state’s coal industry, increase costs for coal producers and make them less competitive with companies operating in other states.

“The secretary’s decision ignores the reliance of the coal industry on Kentucky’s longstanding practices, the impact of regulatory uncertainty on the availability of reclamation bonding, the potential adverse impacts of increase bonding costs on the Kentucky coal industry and the availability of coal for the nation’s energy supply, and a host of other factors that should have been considered and should have informed the secretary’s decision,” the lawsuit states.

The group, which says its members are made up coal mining entities, is suing for violations of SMCRA and the Administrative Procedure Act. Neither it nor its attorney, Larkin, immediately responded Friday to a request for comment.

Kentucky’s bonding program is implemented under the Surface Mining Control and Reclamation Act, or SMCRA, and the coal companies argue the state’s existing regulations, in effect for two decades, “may even be more protective of the environment” than federal regulations.

The state already “ensures that adequate bonding to complete the reclamation plan would be available in the event of bond forfeiture,” the group says, calling Zinke’s proposed changes “arbitrary, capricious” and “inconsistent with law.”

Interior Department spokeswoman Lauren Ehrsam and Office of Surface Mining Reclamation and Enforcement spokesman Chris Holmes declined to comment.

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