Surface Coal Mining: Financial Assurances for, and Long-Term Oversight of, Mines with Valley Fills in Four Appalachian States
Published: 2010-01-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Surface mining for coal in Appalachia has generated opposition because rock and dirt from mountaintops is often removed and placed in nearby valleys and streams. The Office of Surface Mining Reclamation and Enforcement (OSM) in the Department of the Interior and states with approved programs regulate these mines under the Surface Mining Control and Reclamation Act (SMCRA). The Army Corps of Engineers (Corps), the Environmental Protection Agency (EPA), and states also regulate different aspects of coal mining, including the filling of valley streams, under the Clean Water Act. Under SMCRA, mine operators must provide financial assurances sufficient to allow mines to be reclaimed. Under the Clean Water Act, the Corps may require financial assurances that the impact of mines on streams can be mitigated. GAO was asked to examine (1) the approaches OSM, the states, and the Corps have taken to obtain financial assurances for surface coal mines with valley fills; (2) federal and state agencies' monitoring of these mines after reclamation and mitigation are complete; and (3) the federal laws agencies may use, and have used, to address latent environmental problems. GAO gathered information from state and federal agencies in Kentucky, Tennessee, Virginia, and West Virginia about their financial assurances practices, long-term monitoring, and use of federal laws to address environmental impacts at former mine sites. This report makes no recommendations.
section_title: What GAO Found
paragraphs: OSM, the states, and the Corps use different approaches to financial assurances for reclamation and mitigation. Under SMCRA, states have flexibility to require mine operators to provide a bond for the full cost of reclamation or participate in an alternative bonding system such as a bond pool, which may combine bonds, taxes on coal production, and other sources of funding. West Virginia relies exclusively on an alternative bonding system, while Tennessee exclusively uses a full-cost bonding system. The other two states, Virginia and Kentucky, rely on a combination of full-cost bonds and an alternative bonding system. Under the Clean Water Act, the Corps has discretion to require that mine operators provide assurances that funds will be available to mitigate the effects of burying streams with valley fills but it has not done so in the four states we reviewed. Instead, the Corps has relied on other mechanisms to ensure that mitigation will be completed satisfactorily, according to Corps officials. For example, some Corps officials said they rely on SMCRA financial assurances to ensure required mitigation. OSM, EPA, the Corps, and the four states' mining and environmental agencies are not required to monitor former mountaintop mines with valley fills for long-term environmental degradation after reclamation and mitigation are complete and financial assurances have been released. However, several of them, along with the U.S. Geological Survey, have conducted or funded analyses of conditions near reclaimed mine sites with valley fills that have shown environmental impacts. Specifically, analyses have shown that (1) reforestation efforts at some reclaimed surface coal mine sites needed improvement; (2) surface coal mine sites have contaminated streams and harmed aquatic organisms; (3) valley fills may affect water flow; and (4) mine operators have not always returned mine sites to their approximate original contour when required to do so under SMCRA. Federal and state agencies have taken some actions to respond to these findings, including adopting new guidelines for reforestation practices. Several federal laws may be available under limited circumstances to address long-term environmental problems at former mine sites. These laws include SMCRA; the Clean Water Act; the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), also commonly known as Superfund; and the Resource Conservation and Recovery Act. For example, the Clean Water Act authorizes EPA or a state to require a permit if discharges are detected from a former surface mine, and CERCLA may authorize EPA to respond to certain pollution from former surface mines. According to the agencies, they have rarely or never needed to use these authorities. We provided a draft of this report to OSM, the Corps, EPA, Kentucky, Virginia, and West Virginia for review and comment. The federal agencies generally agreed with the report, while the states were critical of what they perceived to be the message of the report.

section_title: Letter
paragraphs: Surface mining for coal in the mountainous areas of Appalachia—a  process often referred to as mountaintop mining—has generated  opposition in recent years because of its impact on landscapes, streams,  ecosystems, and communities. In mountaintop mining, before the  underlying coal can be extracted, the land is cleared of forests and other  vegetation. Explosives or other techniques are then used to break up the  overlying solid rock, creating dislodged earth, rock, and other materials  known as “spoil.” Some or most of the spoil is placed back on the mined- out area to return it to its approximate original contour. However, excess  spoil that cannot be safely placed back is often placed as “fill” in adjacent  valleys or hollows. In some cases, this excess fill buries the headwaters of  streams. (See fig. 1 for an example of a valley fill.)
Mountaintop coal mines that produce valley fills have affected the land  and streams in the central Appalachian states of Kentucky, Tennessee,  Virginia, and West Virginia. According to federal and state estimates, from  1994 through 2003, surface mining had disturbed about 400,000 mostly  forested acres in these states and generated thousands of valley fills.  Furthermore, these valley fills buried 724 miles of headwater streams in  the four states from 1985 through 2001. Another 367 miles of streams in  the Appalachian region are expected to be affected by surface mines that  were approved for permits from October 2001 through June 2005. In  December 2009, we reported on characteristics of mining in the  mountainous areas of Kentucky and West Virginia, including the number  of valley fills approved in those states since 2000. Specifically, we  reported that Kentucky and West Virginia collectively approved nearly  2,000 fills to store at least 4.9 billion cubic yards of excess spoil in nearby  valleys.
Surface coal mining is regulated by the Surface Mining Control and  Reclamation Act of 1977 (SMCRA). SMCRA created the Office of Surface  Mining Reclamation and Enforcement (OSM) in the Department of the  Interior to implement and enforce the act. SMCRA allows an individual  state to develop its own program to implement the act if the Secretary of  the Interior finds that the state program is in accordance with federal law.  A state with an approved program is said to have “primacy” for that  program. OSM has approved state programs for Kentucky, Virginia, and  West Virginia, and annually evaluates how well the state programs are  administered. OSM manages the mining program in Tennessee. One goal  of SMCRA’s, among others, is to assure that mines are reclaimed as  contemporaneously as possible with surface coal mining operations and to  protect the environment from problems—such as water quality  degradation—that may result from mining. SMCRA requires the operator  to provide financial assurance, in the form of a performance bond, in an  amount sufficient to allow the relevant regulatory authority—either OSM  or the state mining agency—to reclaim the mine site if the operator does  not.
Mountaintop coal mine operators may also be required to obtain permits  under the Clean Water Act. The Department of Defense’s Army Corps of  Engineers (Corps), the Environmental Protection Agency (EPA), and state  agencies may all have a role in approving or overseeing permits issued  under the Clean Water Act for certain activities associated with surface  coal mine operations. For example, the Corps has the authority to issue a  permit to a mine operator who seeks to discharge spoil into a stream when  constructing a valley fill, and it may require the operator to compensate  for the loss of the stream through mitigation—actions such as creating a  new stream or enhancing a degraded stream. The Corps also has the  authority to require an operator to provide financial assurances to ensure  a high level of confidence that the compensatory mitigation project will be  successfully completed.
In this context, you asked us to examine (1) the approaches OSM, the  states, and the Corps have taken to obtain financial assurances for surface  coal mines with valley fills; (2) the extent to which federal and state  agencies monitor and evaluate these mines after reclamation and  mitigation are complete; and (3) the federal laws agencies may use, and  have used, to address any latent environmental problems associated with  these mines that may occur after SMCRA or Clean Water Act financial  assurances have expired.
This report focuses on the four Appalachian states of Kentucky,  Tennessee, Virginia, and West Virginia because these areas accounted for  nearly 83 percent of the surface coal production in Appalachia in 2008 and  more than 98 percent of recently-approved valley fills across the country.
To address our objectives, we reviewed relevant federal and state laws,  regulations, and policy guidance on surface coal mining, financial  assurances, reclamation, and mitigation. We also spoke with headquarters  and field officials from OSM, the Corps, EPA, and state mining agencies  regarding financial assurance practices in Kentucky, Tennessee, Virginia,  and West Virginia. Furthermore, we interviewed federal and state agency  officials to obtain information on the long-term monitoring and evaluation  their agencies have done related to reclaimed and mitigated mine sites. We  also analyzed the applicability of selected environmental laws—in addition  to SMCRA and the Clean Water Act—to address long-term environmental  problems that might be caused by mine sites with valley fills, and  interviewed agency officials to learn if such laws had been used in that  context. A more detailed description of our scope and methodology can be  found in appendix I.
We conducted this engagement from October 2008 to January 2010 in  accordance with all sections of GAO’s Quality Assurance Framework that  are relevant to our objectives. The framework requires that we plan and  perform the engagement to obtain sufficient and appropriate evidence to  meet our stated objectives and to discuss any limitations in our work. We  believe that the information and data obtained, and the analysis  conducted, provide a reasonable basis for any findings and conclusions in  this report.
subsections: section_title: Background
paragraphs: The central Appalachian coal region plays a large part in supplying the  country with its energy needs. Specifically, in 2008, West Virginia and  Kentucky were the second- and third-largest coal-producing states in the  nation—behind Wyoming—and accounted for more than 76 percent of the  coal produced from surface mines in Appalachia. West Virginia produced  about 69 million tons of coal from surface mines, while Kentucky  produced about 51 million tons. Virginia produced close to 9 million tons  and Tennessee less than 2 million tons from surface mines in 2008,  respectively.
subsections: section_title: SMCRA Regulates Surface Coal Mining Operations and Requires Financial Assurances
paragraphs: SMCRA requires mine operators to obtain a permit before starting to  mine. The permit process requires operators to submit detailed plans  describing the extent of proposed mining operations, how reclamation on  the mine site will be achieved, and the estimated per-acre cost of  reclamation. In reclaiming the mine site, operators must comply with  regulatory standards that govern, among other things, how the reclaimed  area is regraded, replanting of the site, and the quality of water flowing  from the site. (See app. II for selected details about these key reclamation  standards.) In general, an operator must reclaim the land to a use it was  capable of supporting before mining or an alternative post-mining land use  that the regulatory authority deems higher or better than the pre-mining  land use. Additionally, although the operator is generally required to  redeposit spoil on the mine site so that it approximates the original  contour of the site, the operator may in certain circumstances receive a  variance to this general requirement and leave the land flat or gently  rolling. In addition, a mountaintop removal operation is one that, by  definition, will not restore the area to its approximate original contour.  However, only specific types of post-mining land uses—including  industrial, commercial, agricultural, residential, or public uses—are  allowed for mountaintop removal operations.
SMCRA requires the operator to submit a bond in an amount sufficient to  ensure that adequate funds will be available for the regulatory authority— either OSM or a state with primacy—to complete the reclamation if the  operator does not do so. The bond provisions of SMCRA apply generally  to all types of coal mines and do not include any requirements that are  specific to mines with valley fills. However, the bond amount for a  particular site cannot be less than $10,000 and must also be sufficient to  ensure the completion of the reclamation plan for that particular site if the  work had to be completed by the regulatory authority in the event of  forfeiture. In this report, we refer to a bond that is equal to the expected  cost to reclaim the entire site as a “full-cost bond.” OSM has prepared  guidance for mine operators on how to calculate their bond amounts to  capture the likely costs of reclamation. Bond amounts can be adjusted as  the size of the permit area or the projected cost of reclamation changes.  When all reclamation standards identified in SMCRA and the operator’s  permit—including compliance with water quality standards—have been  met, the bond is completely “released” to the operator.
The OSM regulations implementing SMCRA recognize three major types of  bonds: corporate surety bonds, collateral bonds, and self-bonds.
A surety bond is a bond in which a surety company guarantees the  performance of the permittee’s obligation to reclaim the mine site. If the  mining company does not reclaim the site, the surety company must pay  the bond amount to the regulatory authority or the regulatory authority  may allow the surety company to perform the reclamation instead of  paying the bond amount.
Collateral bonds include cash; certificates of deposit; liens on real estate;  letters of credit; federal, state, or municipal bonds; and investment-grade  securities deposited directly with the regulatory authority.
A self-bond is a bond in which the permittee guarantees its own  performance with or without separate surety. Self-bonds are available only  to operators who meet certain financial conditions. To remain qualified for  self-bonding, operators must, among other requirements, maintain a net  worth of at least $10 million, possess fixed assets in the United States of at  least $20 million, and have an “A” or higher bond rating.
SMCRA also authorizes states to enact an OSM-approved alternative to a  full-cost bonding system as long the alternative achieves the same  objectives. One kind of alternative bonding system is known as a “bond  pool.” Under this type of system, the operator may post a bond—e.g., a  surety bond or collateral bond—for an amount determined by multiplying  the number of acres in the permit area by a per-acre assessment. The per- acre assessment may vary depending on the site-specific characteristics of  the planned mining operation and the operator’s history of compliance  with state regulations. However, the per-acre bond amount may be less  than the estimated cost of reclamation. To supplement the per-acre bond,  the operator generally must pay a fee for each ton of mined coal and may  also be required to pay other types of fees. Funds are placed within a pool  and can be used to reclaim sites that participants in the alternative  bonding system do not reclaim. Under OSM regulations, all alternative  bonding systems must provide a substantial economic incentive for the  operator to comply with reclamation requirements and must ensure that  the regulatory authority has adequate resources to complete the  reclamation plan for any sites that may be in default at any time.
Once bonds have been completely released to a mine operator, the  relevant regulatory authority may terminate its jurisdiction under  SMCRA. However, the regulatory authority may also revoke an operator’s  permit if the operator fails to comply with the permit’s provisions. Under  those circumstances, the operator may forfeit the bond to the regulatory  authority. The regulatory authority then becomes responsible for  reclaiming the land to the reclamation standards found in the operator’s  permit. If the amount forfeited is insufficient to pay for the full cost of  reclamation, the operator remains liable for remaining costs. The  regulatory authority may complete reclamation and may sue the operator  to recover additional expenses. Failure to complete reclamation has other  serious consequences for mine operators—SMCRA prohibits applicants  from obtaining future SMCRA permits if they have unabated violations of  law or regulations applicable to surface mining; state regulations  specifically note that bond forfeitures based on violations that are not  subsequently corrected disqualify operators from obtaining future permits.
section_title: Clean Water Act Provisions Also Regulate Aspects of Surface Coal Mining Operations
paragraphs: The objective of the Clean Water Act is to restore and maintain the  chemical, physical, and biological integrity of the nation’s waters. Section  404 of the act allows the Corps to issue permits for the discharge of  material, including fill material, into waters of the United States at  specified disposal sites. Such permits are needed for the construction of a  valley fill. Section 404(c) authorizes EPA to deny or restrict the use of any  disposal site where it finds that the discharge will have unacceptable  adverse effects. Mining companies may be able to construct valley fills  under one of two types of permits issued by the Corps. First, the mining  company may be authorized to construct a valley fill under the Corps’  “nationwide permit” for surface coal mining. A nationwide permit  provides coverage for substantially similar activities that are expected to  cause only minimal adverse environmental effects on an individual and  cumulative basis. Second, the Corps may issue an “individual permit.”  Individual permits are issued on a case-by-case basis for activities that are  expected to have more than a minimal impact. Before issuing an individual  permit, the Corps must evaluate the operator’s proposed activity for  several factors, including, but not limited to, its effects on environmental  values—such as fish, wildlife, and water quality—and safety issues, as well  as any proposed mitigation for the project.
Under guidelines prepared by the EPA Administrator and the Secretary of  the Army acting through the Chief of Engineers, pursuant to section 404,  the Corps may issue permits to discharge fill material, if, at a minimum,  compliance with the guidelines is demonstrated. One aspect of compliance  is that the discharge does not cause or contribute to “significant  degradation” of waters of the United States. Under these guidelines, an  operator would not be permitted to discharge fill materials into waters of  the United States if there is a practicable alternative to such a discharge  and would be required to minimize discharges that cannot be avoided. If  such discharges are unavoidable, the Corps can require as a condition of  the permit that the operator compensate for the loss or degradation of  regulated waters. In the case of valley fills that bury streams, such  compensatory mitigation could involve (1) creating a new stream, (2)  enhancing a degraded stream, or (3) preserving an existing stream. The  mitigation work may be done within the permitted area (on-site) or  outside of the permitted area (off-site). Mitigation may be performed by  the mine operator or a third party, such as a public or nonprofit entity,  under agreement with the Corps.
The Corps’ Clean Water Act implementing regulations and related policies  authorize the Corps’ district engineers to require financial assurances  when approving section 404 permits in order to ensure a high level of  confidence that compensatory mitigation will be successfully completed.  The Corps allows financial assurances to be in the form of bonds, escrow  accounts, casualty insurance, letters of credit, legislative appropriations  for government sponsored projects, or other appropriate instruments,  subject to the approval of the district engineer. If assurances are required,  district engineers are to determine the amount based on factors such as  the size and complexity of the compensatory mitigation project, the  likelihood of success, the past performance of the project sponsor, and  any other factors they deem appropriate. Also, Corps district engineers  must release financial assurances once they determine that the operator  has demonstrated that a compensatory mitigation project has successfully  met its performance standards. Typically, the monitoring period to assess  the success of a compensatory mitigation project is 5 years but this period  may be extended for projects that take longer, such as stream restoration.
The Corps’ authority to require financial assurances to ensure  compensatory mitigation differs from the authority that mining agencies  have under SMCRA to require bonds for mine reclamation.
While SMCRA explicitly calls for mining agencies to require all operators  to provide bonds, the Corps’ Clean Water Act regulations authorize district  engineers to decide whether financial assurances are necessary on a  permit-by-permit basis. The district engineer may determine that financial  assurances are not necessary for a specific project if an alternate  mechanism is available to ensure a high level of confidence that the  compensatory mitigation will be provided and maintained.
While SMCRA authorizes mining agencies to directly hold and use  financial assurances to ensure the required reclamation is completed if the  operator defaults on its reclamation obligations, the Corps does not have  statutory authority under the Clean Water Act to do so. In light of that  limitation, the Corps’ regulations and policies stipulate that if a district  engineer does choose to require financial assurances, those assurances  must be payable to a third party—such as a governmental or  nongovernmental environmental management organization—that will  agree to hold the funds and complete the mitigation in accordance with  the Corps’ instructions if the operator defaults on its obligations.
In addition to needing a Clean Water Act section 404 permit to construct a  valley fill, mine operators need to obtain a National Pollutant Discharge  Elimination System, or section 402, permit if they discharge pollutants  from industrial point sources. Point sources are discrete conveyances  such as pipes. Section 402 permits, generally administered by the states  under EPA-approved programs, include limits on the amount of  pollutants—such as suspended solids—that mines can directly discharge  into bodies of water. Surface coal mines contain sediment ponds and  drainage ditches that collect runoff from all disturbed areas, including  water from the base or perimeter of valley fills or other locations that may  then flow into a stream. These flows may need to comply with point  source pollutant limitations specified in a section 402 permit. Section 402  permits also require that mine operators submit periodic discharge  monitoring reports to the regulatory authority, which is typically a state  agency. A mine operator cannot obtain the release of its SMCRA bond if  the land is contributing suspended solids and other pollutants, in excess of  applicable state effluent limitations, to stream flow or runoff outside the  SMCRA permit approved area.
section_title: Under SMCRA and the Clean Water Act, Agencies Have Approved Permits for Mines with Thousands of Valley Fills in Central Appalachia
paragraphs: The regulatory authorities in the four states we reviewed have collectively  authorized thousands of valley fills since the enactment of SMCRA in 1977.  Although the total number of valley fills approved since 1977 is uncertain,  data we collected from OSM, Kentucky, Virginia, and West Virginia show  that at least 2,343 valley fills have been authorized since January 2000.  Specifically,    Kentucky authorized 1,488 valley fills through July 30, 2008;    Tennessee authorized 17 valley fills through December 31, 2008;    Virginia authorized 327 valley fills through August 17, 2009; and    West Virginia authorized 511 valley fills through July 30, 2008.
Notably, approval of a valley fill does not necessarily mean that it will be  constructed. For example, according to Virginia state officials, of the 327  valley fills approved between January 2000 and August 2009, 97 were  completed, 103 were under construction, 90 were not started, and 37 were  “not needed and/or not constructed.”
While OSM and state mining agencies have been approving SMCRA  permits with valley fills since the late 1970s, the Corps did not begin to  consistently require section 404 permits for valley fills until the spring of  2002, when the Corps and EPA jointly issued regulations revising the  definition of fill material. Prior to this revision, the Corps interpreted  excess spoil to be a “waste” regulated under section 402 of the Clean  Water Act rather than a fill material regulated under section 404.
The Corps could not readily provide us with data on the total number of  section 404 permits it has issued for valley fills, the number of operators it  has required to complete mitigation for valley fills, the types of mitigation  called for, or the status of mitigation projects. The Corps did provide us  electronic data showing that in the four states we reviewed it approved  378 Nationwide Permit 21 permits from March 2002 through December  2008 and 171 individual permits for surface coal mining operations from  March 2002 through September 2009. However, its database does not  contain information on how many of those permits were for valley fills. In  addition, its electronic database indicated that only 57 of the nationwide  permits required compensatory mitigation projects; Corps officials  believed that number to be understated because the database is not  complete. Although not captured in its electronic database, the  information on valley fills and required compensatory mitigation projects  is more completely documented in the Corps’ paper permit files, according  to agency officials.
section_title: Mining Agencies and the Corps Use Different Approaches to Financial Assurances for Reclamation and Mitigation
paragraphs: The four states in our review use different approaches to fulfill SMCRA’s  requirement that mine operators provide adequate financial assurances for  completing reclamation. These states primarily vary in whether they  require mine operators to fulfill their financial assurance obligation strictly  through a full-cost bond or whether they allow operators to use alternative  bonding systems that combine bonds, taxes on coal production, and other  sources of funding. The Corps has not used its discretionary authority to  require surface coal mine operators in the four states to provide financial  assurances for mitigation work required as part of their section 404 permit,  according to Corps officials. Furthermore, Corps officials said the Corps  has relied on other permit conditions for assurance that mitigation will be  satisfactorily completed.
subsections: section_title: State Mining Agencies’ Approaches to Financial Assurances Vary
paragraphs: The three states with primacy that we examined—West Virginia, Virginia,  and Kentucky—have financial assurance programs that differ from each  other and from the federal program that OSM administers in Tennessee.  Each of the three states has received approval from OSM to use an  alternative bonding system, although they do so to varying degrees.
West Virginia requires that all operators participate in a bond pool.
Virginia relies primarily on a bond pool but also uses a full-cost bonding  system.
Kentucky relies primarily on a full-cost bonding system but also uses a  bond pool.
Tennessee uses a full-cost bonding system.
subsections: section_title: West Virginia
paragraphs: All mine operators must participate in the state’s alternative bond system.  The state has limited the site-specific per-acre bond to between $1,000 and  $5,000. The state also collects a tax on each ton of coal produced. The  current tax is 14.4 cents per ton of clean coal produced. The state deposits  those funds into a Special Reclamation Fund and a Special Reclamation  Water Trust Fund. As of June 2008, the combined balance for the two  funds was $46.9 million. The state can use these funds to reclaim lands  that were permitted and abandoned after August 3, 1977, for which there is  not enough bond amount to cover reclamation.
The West Virginia legislature created an advisory council in 2001 to ensure  the effective, efficient, and financially stable operation of the Special  Reclamation Fund. The advisory council is required to report to the  legislature every year on the financial condition of the fund. Furthermore,  the West Virginia Department of Environmental Protection is required to  conduct formal actuarial studies every 2 years and conduct informal  reviews annually on the Special Reclamation Fund and Special  Reclamation Water Trust Fund. In January 2009, recognizing that the tax  rate was scheduled to drop from 14.4 cents per ton to 7 cents later that  year, the advisory council recommended that the state legislature adjust  the tax rate to 13 cents per ton for at least a 5-year period or provide for  additional funding needed to ensure solvency. While the council  concluded that the fund was solvent as of January 2009, it stated that,  based upon projections in the 2008 actuarial study and with only the  known revenue sources at that time, the fund balance would be negative  by 2015. In April 2009, the state legislature set the tax rate at 14.4 cents per  ton, effective July 1, 2009; called for a review of the tax every 2 years to  determine whether it should be continued; and stipulated that the tax  could not be reduced until the funds have sufficient monies to carry out  required reclamation.
section_title: Virginia
paragraphs: Virginia offers the option of a bond pool to operators who meet eligibility  criteria; other operators must post a full-cost bond. As of October 2009,  the majority of active surface mine permits were covered by the bond  pool. According to officials from the Virginia Department of Mines,  Minerals and Energy, as of October 13, 2009, there were 148 active surface  mine permits in the bond pool and 18 surface mines covered by full-cost  bonding. The total bonded amount in the bond pool was about $143  million, while the total for full-cost bonding was about $14 million. An  operator must be able to demonstrate at least 3 consecutive years of  compliance under Virginia’s Coal Surface Mining and Coal Reclamation  Act or any other comparable state or federal act to participate in the bond  pool. Once in the pool, an operator cannot opt out. Operators in the pool  must pay an entrance fee of $1,000 when the total balance of the pool is  determined to be greater than $2 million; the entrance fee increases to  $5,000 if the total fund balance falls below $1.75 million, and remains at  $5,000 until the balance again exceeds $2 million. A fee of $1,000 is  required of all operators in the pool when the permit is renewed.  Participants in the bond pool also furnish a bond of $1,500 or $3,000 per  acre, depending on when the permit was issued. Regardless of acreage,  bonds for operations entering the fund on or after July 1, 1991, must be at  least $100,000. If forfeiture occurs, the state may, after using the available  bond monies, use the bond pool funds as necessary to complete  reclamation liabilities for the permit area.
To oversee the bond pool’s general operations, the Virginia legislature  created a reclamation fund advisory board that meets at least twice each  year to make recommendations to the director of the Department of  Mines, Minerals and Energy. The advisory board must also report to the  director and to the governor on the pool’s financial status and recommend  to the director any new or amended regulations for administering or  operating the pool. According to the department, the advisory board  concluded in August 2009 that the fund was solvent.
section_title: Kentucky
paragraphs: Kentucky offers mine operators who meet eligibility criteria the option of  participating in a bond pool, but the vast majority of operators provide  full-cost bonds. According to the most recently available state data, as of  May 2007, only 65 permits were covered by the bond pool. As of June 30,  2009, OSM data showed that there were a total of 893 permits for surface  mining in Kentucky. To participate in the bond pool, state regulations  require that an operator have an acceptable or better history of  compliance with the state’s mining regulations, among other criteria. The  cost of membership ranges from $1,000 to $2,500 and depends on a  member’s performance record. In addition, participants must obtain a  bond that ranges from $500 to $2,000 per acre, depending on the  performance rating of the member. Finally, members pay a 5 cent per-ton  fee for surface-mined coal. When the Kentucky Bond Pool Fund reaches  $17.4 million, the assessment of tonnage fees is to be suspended for all  members who have made 36 or more monthly payments to the fund. If the  fund level drops to $12.3 million, the tonnage fee requirement will be  reinstated for all members. The funds in the pool are available only for  reclamation costs at sites operated by members of the pool. Bond pool  members’ per-acre bonds are fully released at the completion of the initial  phase of reclamation. After the initial phase, a permit is covered only by  the bond pool.
In Kentucky, the law requires a review of the actuarial soundness of the  bond pool every 3 years. The last Kentucky actuarial study, which  evaluated the pool as of May 31, 2007, concluded that the fund, with a  balance of $19.7 million, was solvent and that it had been building its  assets at a faster pace than the increase in its outstanding liabilities. As an  indication of the pool’s financial soundness, the study noted, the pool  could survive the failure of its two largest members. The study concluded  that the fund’s soundness had improved because its liability was more  evenly spread among its members. The study recommended that the state  continue the 5 cent per ton fee for surface coal mines and limit the  maximum amount of bond funds held for any member operator to $6  million, or about 30 percent of the total bond pool. According to the state’s  bond pool administrator, the pool has continued the 5 cent per ton fee as  recommended. He also said there has never been a member of the bond  pool to have bonds in excess of $4 to $5 million because the program  primarily offers bonding assistance to small coal operators.
section_title: Tennessee
paragraphs: Tennessee is the only one of the four states we reviewed to use a full-cost  bond system exclusively. As of September 30, 2008, the state had 15 active  surface coal mines. OSM held bonds totaling about $17.8 million for those  15 mines. In 2007 OSM revised its regulations for Tennessee to address  concerns that full-cost bonds were not adequate to handle the problem of  post-mining acid- or toxic-mine drainage. Specifically, the new  regulations provide a mechanism in Tennessee to allow operators to  establish a trust fund or annuity to cover the cost of postmining pollution  discharges in lieu of a performance bond. OSM’s policy in Tennessee is to  assume that post-mining pollution discharges will need to be treated for at  least 75 years, barring evidence to the contrary. When OSM established the  trust fund and annuity options in Tennessee, it stated that a system that  provides an income stream may be better suited than full-cost bonds to  ensure the long-term treatment of postmining pollution discharges.  According to OSM, surety bonds, the most common form of a full-cost  bond, are especially ill-suited for this purpose because surety companies  normally do not underwrite a bond when there is no expectation of release  of liability. The addition of this authority in Tennessee builds upon the  experience of Pennsylvania, which had already established a process for  accepting trust funds or annuities to pay for postmining discharges.
section_title: OSM Oversees State Bonding Programs and Has Made Bonding a National Priority for the 2010 Evaluation Year
paragraphs: In October 2009, the acting director of OSM announced that OSM was  making bonding a national priority of its 2010 annual evaluation of state  mining programs. Specifically, the acting director instructed regional and  field office directors to evaluate how states are complying with their own  regulations for determining required bond amounts. The instructions  further stated that the evaluations should assess whether (1) the states’  methods of determining bond amounts ensure that adequate funds are  available to the state in the event that the operator forfeits its bond, (2) the  bond calculation methods include a mechanism to adjust bond amounts or  provide other financial assurance to cover the cost of unanticipated long- term postmining pollutional discharges that develop after permit approval,  and (3) the state re-evaluates the bond amount each time a permit is  revised or renewed. According to an OSM official in the Appalachian  Regional Office, OSM chose bonding as a national priority after surveying  managers and staff for their oversight priorities. OSM’s November 2009  work plan calls for OSM to examine a sample of forfeited sites to  determine whether adequate bonds were posted and whether the sites  were reclaimed as proposed in their reclamation plans. For those sites  covered in part or in total by a full-cost bond, OSM plans to use its  directive on bond calculation as a basis for evaluating the adequacy of  bonds. OSM plans to finalize a report on its findings by September 1, 2010.
In addition, OSM announced in November 2009 that it was considering  rulemaking to address concerns related to bonding programs. One of  OSM’s concerns is that mine operators do not always apply for bond  release in a timely manner, particularly for phases II and III. OSM noted  that there is no legal requirement that operators apply for bond release in  a timely manner and identified several options for improving timeliness.  Another concern of OSM was that the data needed to assess the success of  reclamation has not been adequate. To improve data quality, OSM is  considering requiring operators to submit an annual status report to the  regulatory authority with information on areas that are permitted, bonded,  disturbed, backfilled and graded, newly planted, and that have reached  one or more of the phases of bond release.
While OSM has made bonding an oversight priority for 2010 and is  considering related rulemaking options, it has reported on various aspects  of state bonding programs in prior annual evaluations. For example, in its  2009 evaluation year report on West Virginia, OSM reported that it did not  appear that the state was meeting requirements for inspections at bond  forfeiture sites. OSM estimated that the state had completed about 55  percent of the required inspections at bond forfeiture sites. In its 2009  report on Virginia, OSM reported that it had reviewed a sample of  operators that applied for phase III bond release during the year and found  that on-the-ground reclamation had been successful. In its 2009 report on  Kentucky, OSM provided information on the number of forfeited permits  at which reclamation was complete or underway. OSM has reported on the  states’ bonding programs in other evaluations, but it was not within the  scope of our review to assess the effectiveness of those programs.
section_title: The Corps Has Not Required Financial Assurances for Valley Fill Permits in the Four States but Has Relied on Other Mechanisms
paragraphs: The Corps has not required operators with section 404 permits for mines  with valley fills to provide financial assurances to ensure mitigation is  completed, according to officials in the five district offices that approve  permits in the four states we reviewed. Corps officials said they have not  required financial assurances for the following reasons:    The agency does not have statutory authority to directly hold and use  performance bonds to ensure that mitigation is completed. Officials said  that if they did require financial assurances, an operator would need to  identify a third party to hold the assurances and complete the mitigation if  the operator does not. Some Corps officials said, however, that few third  parties with the ability to conduct stream restoration have been available.
The mine operators have had sufficient capital to complete required  mitigation or have demonstrated their ability to successfully complete  other mitigation work.
It is assumed that mine operators will comply with compensatory  mitigation requirements without financial assurances.
The operators’ approved mitigation projects are not yet complete and  therefore the Corps has no evidence that these projects will be  unsuccessful.
Corps officials told us the Corps has relied on mechanisms other than  financial assurances to ensure that mitigation associated with valley fill  permits will be satisfactorily completed. Specifically, one mechanism may  require the operator, under the terms of its permit, to prepare an adaptive  management plan. Such a plan would identify alternative mitigation  actions the operator would take in the event that elements of the original  plan did not succeed. In addition to an adaptive management plan, the  Corps may require a permit to include a contingency plan that identifies  acceptable alternative compensatory mitigation should the approved  mitigation project fail. A contingency plan could require that the operator  purchase mitigation credits from an in-lieu-fee program if the planned  mitigation does not succeed.
Some Corps officials also told us that the SMCRA bond could be used to  cover the mitigation required under section 404, but others disagreed.  According to a Norfolk, Virginia district Corps official, when off-site  mitigation is part of the 404 permit, the Virginia state mining agency will  expand the area covered by the SMCRA bond beyond the mine area to  include land on which the 404 mitigation is to be done. The Norfolk,  Virginia district official stated that this practice is consistent with the  Corps’ 2004 mitigation policy for surface mining operations. This policy  encourages district engineers to coordinate with state or OSM staff and  the mining operators to incorporate required SMCRA features—such as  drainage ditches and sediment ponds—into section 404 compensatory  mitigation plans. On the other hand, Corps officials in Huntington, West  Virginia, said they consider the SMCRA bond as a financial assurance only  for mitigation projects done on the surface mine site. In further contrast, a  Corps district official we spoke with in Louisville, Kentucky, does not  consider the SMCRA bond to be an assurance for on-site section 404  mitigation because the goals of reclamation and mitigation are not always  the same. According to Corps headquarters officials, the district offices  have the discretion to decide if SMCRA mitigation projects qualify as  section 404 mitigation. Officials from OSM’s Appalachian region and field  offices agreed that on-site section 404 compensatory mitigation can be  incorporated as a special condition of the surface mining reclamation plan  in a SMCRA permit.
section_title: Federal and State Agencies Are Not Required to Monitor Former Mine Sites but Have Conducted Some Analyses of Environmental Impacts
paragraphs: OSM, the states’ mining or environmental agencies, EPA, and the Corps  are not required to monitor former mountaintop mines with valley fills for  long-term environmental degradation after reclamation and mitigation are  complete and financial assurances have been released. While the agencies  are not required to collect post-reclamation monitoring data, several have  analyzed conditions near reclaimed mine sites with valley fills and found  that (1) reforestation efforts at some reclaimed surface coal mine sites  needed improvement, (2) some surface coal mine sites have contaminated  streams and harmed aquatic organisms, (3) a link exists between valley  fills and changes to water flow, and (4) mine operators have not always  returned mine sites to their approximate original contour when required to  do so under SMCRA. Several federal and state agencies have taken some  actions to respond to these findings.
subsections: section_title: Additional Monitoring after Releasing Financial Assurances Is Not Required or Needed, According to Many Agency Officials
paragraphs: Federal and state agencies in the four Appalachian states we reviewed are  not required by SMCRA or the Clean Water Act to monitor mine sites with  valley fills or associated mitigation sites after they have determined that  reclamation and mitigation are complete. Most officials we interviewed at  the federal and state mining and environmental protection agencies in the  four states we reviewed said post-reclamation or post-mitigation  monitoring is not needed, with officials from several agencies explaining  that the laws or their implementing regulations require adequate  monitoring before an agency can determine that either reclamation or  mitigation is complete. For example, in order to obtain bond release under  SMCRA, mine operators must be able to demonstrate to agency inspectors  that revegetation, water quality, and other standards are being met.  Generally, this period is 5 years after the last reclamation activity. Officials  from EPA and the state departments of environmental protection also told  us that they do not monitor mine sites for water pollution discharges after  they have been reclaimed. In order to achieve bond release, according to  OSM and state officials, the operator typically removes and reclaims all  sediment ponds that are subject to section 402 discharge permits and must  demonstrate that discharge limits have not been exceeded for a year.  Therefore, once the bond has been released, officials would no longer  have a reason to monitor the site for section 402 permit violations.  Officials from two Corps districts said that the Corps’ requirement that the  operator monitor and report on mitigation sites for 5 to 10 years before the  Corps will determine that the mitigation is complete is sufficient. In  addition, officials from three Corps district offices told us that because  they did not begin to consistently issue section 404 permits for valley fills  until 2002, few mitigation projects have been in place long enough to have  been completed and thus are not available for post-mitigation review.
While the agency officials we spoke with generally said that additional  monitoring is not necessary after reclamation and mitigation are complete,  there were some that said that additional monitoring is needed to evaluate  the long-term effectiveness of those activities. Specifically, officials from  EPA’s Office of Water and region 3 and 4 offices said that they believe  monitoring has not been adequate to document the success of section 404  mitigation projects. Officials from the U.S. Geological Survey Water  Science Center in West Virginia told us that additional long-term  monitoring is needed to collect data on a range of issues, including water  contamination, flooding, and land stability.
section_title: Agencies Have Conducted Some Studies, which Show Long-Term Impacts from Valley Fills, and Taken Some Actions
paragraphs: Several agencies have conducted or funded studies that show some  evidence of the effect of environmental changes associated with  mountaintop mines with valley fills after reclamation. The majority of the  studies that agencies referred us to were done as part of the 2003 draft  multiagency programmatic environmental impact statement (PEIS) on  mountaintop mining and valley fills. Among the concerns raised by these  studies were reforestation efforts, effects of mining on aquatic organisms,  relations between valley fills and floods, and reclamation to the  approximate original contour. Several agencies have taken actions in  response to some of these concerns, such as promoting new reforestation  methods.
subsections: section_title: OSM and State Mining Agency Studies Found that Reforestation Efforts at Reclaimed Mine Sites Needed Improvement
paragraphs: OSM and state mining agencies have found that reclamation efforts on  mountaintop mines and valley fill sites could be improved to yield more  successful reforestation. For example, the 2003 draft PEIS noted that  previously forested mountaintop mine sites were more likely to have been  revegetated with grasses than with trees. One PEIS study compared  revegetation at a sample of southern West Virginia mountaintop removal  and valley fill mining sites with adjacent unmined sites; the revegetation  had occurred from 8 to 26 years prior to the study, and therefore the  operators probably had their bonds released. According to the study,  poor vegetation development with time was typical of the reclaimed sites,  with significantly lower tree diversity on the mined sites than in adjacent  forests. The study found that its data and other published studies  supported the conclusion that mining reclamation procedures limit the  overall ecological health and inhibit the desired growth of native tree and  shrub species on the site. With regard to the study in the draft PEIS, OSM  officials told us that SMCRA permits do not always call for reforestation.  For example, a mine site might be approved for reclamation as pasture or  commercial development. Therefore, reclaimed mine sites may not need to  become forested to meet SMRCA requirements.
In June 2008, OSM issued a policy directive to promote the  reestablishment of forest land where existing forests had been removed by  surface mining. In its directive, and in related advisory documents, OSM  noted that past reclamation and revegetation efforts had not been fully  successful and had led to low rates of tree survival and growth, forest  fragmentation, reduced carbon sequestration, loss of wildlife habitat and  forest products, and increased potential for floods. To reverse this trend,  the directive encourages, but does not require, the widespread and routine  planting of native, high-value trees that should help restore the uses and  ecosystems provided by forests prior to mining. The directive also  encourages mine operators to avoid compacting the top 4 feet of soil on  reclaimed mine sites in order to promote water infiltration and tree  growth. The OSM directive is part of a broader effort known as the  Appalachian Regional Reforestation Initiative—formed in 2004 by federal  and state agencies, the coal industry, environmental organizations, and  others in the Appalachian region—to promote improved reforestation  techniques on surface-mined lands. Officials from Kentucky, Virginia, and  West Virginia told us that the OSM initiative built upon changes in  reforestation policy or regulation at the state level. According to an OSM  Appalachian Region official, while he believes that the use of these  techniques is increasing, he also said that reliable data showing the acres  of mined land planted using these techniques are not available. According  to this official, OSM is working with participants in the reforestation  initiative on methods for assessing success.
section_title: Federal Agencies Have Found That Contaminants from Mine Sites, Including Reclaimed Sites with Valley Fills, Have Harmed Aquatic Organisms
paragraphs: According to the 2003 draft PEIS, approximately 1,200 miles of headwater  streams within the boundaries of mining permits (or 2 percent of the  streams in the central Appalachian study area) were directly affected by  mountaintop mining and valley fills. For example, streams below valley  fills were characterized by contaminants discharged from mine sites as  well as less diverse and more pollutant-tolerant aquatic invertebrates and  fish. Furthermore, in some locations, streams where mountaintop mines  and valley fills exist, concentrations of selenium, a potentially toxic  element that accumulates in aquatic organisms, were found to exceed  standards.
In 2008, EPA scientists reported that aquatic life downstream from 27  active and reclaimed mountaintop mines with valley fills showed subtle to  severe effects compared with aquatic life downstream in similar, but  unmined, West Virginia watersheds. More specifically, the authors  compared three reclaimed mine sites with three unmined sites over a  period of 6 to 7 years. According to the study, two of the three reclaimed  mine sites showed further degradation of aquatic organisms over the  period while the third showed some improvement, but in each case the  three reclaimed sites were impaired compared with the unmined sites.
EPA has cited the 2008 study, as well as other analyses, in recent actions  that it has taken on section 404 permits for valley fills. In September 2009,  EPA announced its plan for the “enhanced coordinated review” of 79  section 404 permit applications for surface mines with valley fills pending  with the Corps. In making its announcement, EPA stated, among other  things, that on the basis of the scientific literature, its field experience, and  available project information, it was concerned that the mitigation  proposed may not be sufficient to replace lost aquatic resources. On the  other hand, Corps officials told us that they believe that the scientific  literature EPA referred to is not complete; specifically, that it lacks  adequate site-specific analysis.
Also in September 2009, EPA asked the Corps to reconsider a section 404  permit that it issued in 2007 for the Spruce No. 1 mine in West Virginia  with planned valley fills that, if built, would fill more than 8 miles of  headwater streams. EPA expressed concerns that the Corps decision to  issue the permit did not reflect studies showing that impairments from  surface coal mining are persistent over time and cannot be easily mitigated  or removed. EPA also raised specific concerns about the mitigation plan in  the issued permit, including the planned use of drainage ditches—such as  might be constructed at the perimeter of valley fills—as compensatory  stream channels. EPA said that it has consistently objected to the use of  these ditches as compensation for lost headwater stream channels and  requested that the Corps re-evaluate the mitigation plan to ensure that it  achieves functional replacement of lost aquatic resources. On September  30, 2009, the Corps’ district engineer in Huntington, West Virginia,  responded to EPA, noting that the decision to issue the permit had  followed extensive coordination with EPA for nearly 10 years concerning  the project’s scope, alternatives, and compensatory mitigation and  included the preparation of an Environmental Impact Statement.  Furthermore, the district engineer said that there were no factors at that  time that compelled him to consider suspending, modifying, or revoking  the permit. However, EPA’s acting regional administrator for Region 3  wrote to the Corps on October 16, 2009, that additional modifications  would need to be made if the permit were to comply with the Clean Water  Act and the regulations implementing the act.
EPA is preparing additional analysis of the impacts of mountaintop mining  sites, including reclaimed sites, on water quality and aquatic life. EPA’s  Office of Research and Development plans to release for public comment  a draft assessment in early 2010 that evaluates restoration and recovery  methods that mining companies use to address the ecological impacts  associated with mountaintop mining and valley fills. EPA plans to  prepare the assessment with advice from an expert panel chartered under  the Federal Advisory Committee Act.
section_title: Federal Agencies and the State of West Virginia Have Drawn a Link between Valley Fills and Changes to Water Flow
paragraphs: Federal and state agencies examining the impact of mountaintop mines  with valley fills have found that in streams downstream from these sites,  low flows are usually increased and storm flows are sometimes increased.  For example, according to the 2003 draft PEIS, streams in watersheds  below valley fills tended to have greater base flows. Streams with fills  were generally less likely to experience increases in peak flow than  unmined areas during most storms. However, they were more likely to  experience increases in peak flow during more intense rainfall events.  Consequently, the draft PEIS concluded that water flows may increase  below valley fills, but that the effects are site-specific. This conclusion was  derived, at least in part, from studies by the U.S. Geological Survey, which  compared changes in water flow in watersheds with valley fills (some of  which had been reclaimed) with watersheds without valley fills.
In addition, the state of West Virginia has examined the extent to which  mining activities may have contributed to flooding associated with a  particular storm event. On July 8, 2001, the southern portion of West  Virginia experienced a major rainstorm that produced disastrous flooding.  This flooding damaged or destroyed hundreds of homes and many  businesses. Most of the affected counties are in the heart of West Virginia’s  southern coalfields and have extensive underground and surface mining  activities. Logging is also prevalent in this region. In response to public  concerns, the governor created a Flood Investigation Advisory Committee  and a Flood Analysis Technical Team to focus specifically on the impacts  of the mining and logging industry on the July 8th flooding.
The team compared two watersheds with extensive mining (and logging)  activities, including valley fills, with a third watershed with no such  activities. In general, according to the team, the contributions of mining  and logging to increased water flow were relatively small when compared  to the total stream flow volumes. It concluded, however, that mining and  logging influenced the studied watersheds by increasing surface water  runoff and the resulting stream flows at various evaluation points.  Consequently, the flood analysis technical team recommended that, among  other things, the state revise its regulations to prohibit any increase in  surface water discharge over pre-mining conditions and modify certain  requirements for valley fill construction. In 2003, the state received OSM’s  approval to revise its mining regulations to require that permit  applications contain a storm water runoff analysis and that the worst case  during mining and post-mining evaluations must show no net increase in  peak runoff compared with the pre-mining evaluation. According to the  Secretary of the West Virginia Department of Environmental Protection,  the state has also modified its valley fill construction rules to further  ensure no flooding potential in times of short, intense runoff from flash  storms. These modifications include engineering requirements to help  ensure the stability of the valley fill.
section_title: OSM Has Studied Operators’ Reclamation of Mountaintops to Approximate Original Contour
paragraphs: Returning spoil material to a mined out area in order to approximate the  original contour and elevation of the mountain helps to reduce the amount  of excess spoil that otherwise might be placed in a valley fill. As we  reported in December 2009, most operators in West Virginia and Kentucky  have not requested a variance from this requirement. However, according  to OSM studies in 1999 and 2001 of West Virginia and Kentucky’s  implementation of the approximate original contour standard, some  reclaimed sites where the operator was supposed to return the land to  approximate original contour differed little from sites that had been  granted variances. OSM also reported in 1999 that most mountaintop  removal projects in Virginia were reclaimed to a configuration closely  resembling the approximate original contour, even when the state had  granted a variance to the operator. Following those findings, the states  issued new guidance on how to achieve approximate original contour. In  2007 and 2008, OSM reviewed the effectiveness of the states’ new contour  policies and procedures; the results of those reviews were not available as  of November 2009. In October 2009, OSM’s acting director instructed the  field offices to assess all the states’ implementation of approximate  original contour standards starting in 2010.
section_title: Federal Laws May Be Available Under Limited Circumstances to Address Long-term Environmental Problems Associated with Valley Fills but Have Rarely or Never Been Needed or Used, According to Agency Officials
paragraphs: Several federal laws may be available, under limited circumstances, to  address environmental problems associated with mountaintop mines with  valley fills after SMCRA or Clean Water Act financial assurances have  expired, but these have rarely been needed or used, according to federal  and state officials. We selected four federal laws for analysis in this regard:  SMCRA; the Clean Water Act; the Comprehensive Environmental  Response Compensation and Liability Act (CERCLA), also commonly  known as Superfund; and the Resource Conservation and Recovery Act  (RCRA).
subsections: section_title: SMCRA Provides Limited Authority to Address Environmental Problems at Former Mine Sites after Bond Release
paragraphs: OSM and state mining agencies can use additional SMCRA provisions  under two limited sets of circumstances to address environmental  problems at former mine sites. First, SMCRA regulations require a mining  agency to reassert jurisdiction over a mine site after a bond release if it  can demonstrate that the release was based on the operator’s fraud,  collusion, or misrepresentation of a material fact. According to OSM,  reassertion of jurisdiction could involve reopening the permit and  requiring a new bond. However, OSM and state officials reported to us that  they have rarely needed to use this authority. For example, OSM told us  that it had reasserted jurisdiction on one post-bond release site in West  Virginia that was discharging pollution after the agency successfully  argued in court that the company had misrepresented material facts when  the bond was released.
Second, SMCRA authorizes OSM and approved states to use funds from  OSM’s Abandoned Mine Land Fund to reclaim some sites. SMCRA  established the fund to reclaim certain sites mined prior to SMCRA’s  passage in 1977. However, amendments to SMCRA have made these funds  available for additional projects. Specifically, OSM and primacy states can  use these funds to reclaim sites for which any bond or other source of  funds is insufficient for reclamation when (1) mining occurred between  the enactment of SMCRA and OSM approval of a state program or (2)  mining occurred between the enactment of SMCRA and its amendment in  1990 and the mine operator’s surety has become insolvent. Moreover,  these funds must be used to rectify situations posing extreme danger or  adverse effects to public health and safety before they are used to restore  environmental resources. Funds for carrying out these purposes are  generated by a tax on coal production and may also be generated by  penalties assessed for violations of SMCRA. OSM officials told us that  each year a small amount of civil penalty money is available for any state  that requests it, on a competitive basis for site reclamation and that the  agency has used these funds in the past for as many as four inadequately  reclaimed mine sites each year.
section_title: The Clean Water Act Authorizes EPA or State Water Quality Regulators to Require a Permit for Discharges from Former Surface Mines
paragraphs: Two provisions of the Clean Water Act authorize EPA or state water  quality regulators to address or monitor water quality issues associated  with former mine sites. First, the act authorizes EPA or EPA-authorized  states to regulate discharges of pollutants from point sources by issuing  and enforcing National Pollutant Discharge Elimination System section  402 permits that include limits on discharges of specific pollutants.  According to EPA officials, a point source at a mining site could be, for  example, a ditch draining a sediment pond at the base of a valley fill. Mine  operators typically remove such point sources prior to receiving full bond  release. However, in some circumstances, sediment ponds and associated  drainage ditches may be authorized to remain on site if provisions for  ongoing maintenance of the pond are made. If, after bond release,  conditions at the former mine site change so that pollutants are being  discharged from a point source, the party responsible for maintaining the  point source—which could be the former mine operator or the landowner  of the mine site—would have to obtain a section 402 permit and would be  subject to applicable pollutant discharge limitations. EPA officials  emphasized that a point source may remain after bond release and that the  requirement to maintain a permit for any such remaining point source  would be indefinite. However, state officials told us that they have rarely,  if ever, needed to use this Clean Water Act authority to require a new  permit for a point source at a surface coal mine.
Second, the Clean Water Act requires states to identify impaired waters  and to develop “total maximum daily loads” (TMDLs) for impaired  waters. States may be able to use information on impaired waters to  indirectly mitigate latent pollution associated with former surface coal  mine sites. Specifically, if the state determines that a water body is  impaired, it must eventually develop, for each pollutant causing an  impairment, a TMDL—the amount of the pollutant that the water body can  receive, taking into account seasonal variations and a margin of safety,  and still meet the water quality standard applicable to that body of water.  To implement a TMDL, states allocate pollutant loadings among specific  sources, such as mines, and incorporate the loads into the state’s water  quality management plans and section 402 permits. Thus, if a proposed  mine would cause a body of water to exceed its TMDL for a given  pollutant, the state may, among other things, impose stricter discharge  limits in that site’s section 402 permit in order to achieve water quality  standards. In addition, the Corps and EPA may use the information on  impaired waters in considering whether a section 404 permit for a valley  fill operation should be issued. For example, in raising concerns regarding  the Corps’ permit for the Spruce No. 1 mine in West Virginia in 2007, EPA  cited the existence of a TMDL in the mine’s watershed; EPA’s decision as  to whether to veto this permit was pending as of October 2009.
The states we reviewed have identified mining as a general cause of  impairment for certain bodies of water, but they have not attributed such  impairments to specific mine sites. For example, West Virginia’s 2006  Water Quality Assessment Report identified coal mining as a probable  source of impairments for about 4,066 miles of streams in the state, but did  not identify specific mining permits as a source.
section_title: CERCLA May Authorize EPA to Respond to Pollution from Former Mines
paragraphs: CERCLA, commonly known as Superfund, authorizes, but does not  require, EPA to respond to the release or threatened release of hazardous  substances from a former surface coal mine. Whether a particular release  from a former mine constitutes a hazardous substance must be determined  on a case-by-case basis. Some of the pollutants commonly associated with  coal or coal mining, such as selenium, are considered hazardous  substances under CERCLA. CERCLA allows the government to collect the  costs of mitigating or cleaning up these substances from responsible  parties. However, EPA officials said that the agency has not used CERCLA  authority to respond to mine pollution released from a former surface coal  mine site. EPA has noted that coal contains trace amounts of hazardous  substances, but that such amounts as may be released over time from a  former surface mine might not rise to the level that would trigger an EPA  response.
section_title: EPA is Considering Regulating Coal Combustion Residue at Surface Mines under RCRA
paragraphs: As currently implemented, the hazardous waste provisions of RCRA would  not generally be available to address environmental issues at former  surface coal mines because many of the wastes associated with the  extraction, processing, and combustion of coal have been exempted from  the definition of hazardous waste. However, concern over one particular  coal by-product, coal combustion residue, may lead to regulation of the  material as a hazardous waste in the future. Coal combustion residue—the  material that is left once coal has been burned, as in a power plant—is  sometimes placed on surface mines to abate acid mine drainage.  According to OSM, the residue may also be used to enhance soil, seal and  encapsulate material, and backfill mine sites. If coal combustion residue  were deemed a hazardous waste, surface mines receiving such materials  might be subjected to RCRA’s hazardous waste provisions and could be  forced to address releases of hazardous wastes. Currently, EPA is  developing regulations on managing coal combustion residue, including  those managed in surface impoundments, such as one that failed in  Tennessee in December 2008. EPA is considering a number of  approaches for regulating coal combustion residue, including using the  solid waste provisions of RCRA, or a combination of the solid and  hazardous waste provisions of RCRA.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of the Interior, the  Department of Defense, and the Environmental Protection Agency for  review and comment. We also provided a draft of this report to the  Kentucky Department for Natural Resources; the Virginia Department of  Mines, Minerals and Energy; and the West Virginia Department of  Environmental Protection. The three federal agencies generally agreed  with our findings, while the three state agencies were critical of what they  perceived to be the message of the report.
The Department of the Interior said that it believed the report is an  informative and fair characterization of the federal and state program  requirements under SMCRA pertaining to financial assurances in the four  states we reviewed. The Department of Defense said that, in general, it  believed the report is informative and provides a good discussion of the  issues involved in financial assurances for surface coal mining in  Appalachia.  The Environmental Protection Agency noted that the report  provides a factual presentation of issues associated with the review and  regulation of surface coal mining practices. The agency also noted that the  data presented in this and a December 2009 GAO report provide helpful  context for federal and state agencies as they continue to work together to  address both the near- and long-term consequences of surface coal mining  activities on the environment, water quality, and Appalachian coalfield  communities.
The three state agencies’ comments were critical of the draft report. For  example, Kentucky commented that it believed the report is overly broad  in its generalized statements, that terms and phrases are used  interchangeably so as to confuse the issues, and that the report is written  in a manner to misrepresent and sensationalize the issues. We do not agree  that the report misrepresents or sensationalizes the issues, and have  reviewed our use of terms—such as mountaintop mining, mountaintop  removal mining, valley fills, and hollow fills—to ensure that they are used  consistently and appropriately throughout the report.
Virginia commented that the report appears to be based on an assumption  that there are post-bond release pollution discharges below valley fills, and  that it was concerned with our use of an EPA study (by Pond, Passmore, et  al.) to support the point that such discharges may occur. The state also  noted that pollution problems that may occur are likely to be site-specific.  We disagree with Virginia’s characterization of our report because we did  not assume that there are post-bond release pollution discharges below  valley fills. In fact, our report notes that there is little monitoring of sites  after bond release, thereby making it difficult to assess post-bond release  conditions. Nevertheless, we recognize in the report that there is some  evidence, including in the EPA study, that such problems may occur. We  agree that problems, if they occur, are likely to be site-specific.
West Virginia noted that all coal mines—not just Appalachian mines with  valley fills—are subject to SMCRA and the Clean Water Act. The state also  commented that the report seemed to imply that there is a bonding or  financial assurance problem in the four Appalachian states we reviewed  and that surface coal mines with valley fills are the only mines that have  the potential to cause environmental harm. West Virginia also commented  that the report implied that the monitoring period before bond release  should be longer. While we recognize that other types of coal mining are  subject to these laws and may affect the environment, our report focused  on surface coal mining with valley fills.  The four states we reviewed have  more than 98 percent of the recently approved valley fills across the  country. In addition, our report contained no conclusions about the  adequacy of the bonding programs in the four states or the length of the  monitoring period; instead, we attempted to present information on the  requirements of the relevant laws. Although West Virginia commented that  the report did not give full credit to the state for improvements it has made  in reforestation, approximate original contour, and surface water runoff  practices, it did not provide any additional information to support these  statements. The report does provide information on actions taken by the  state in these areas.
We present the agencies’ letters containing their general comments, along  with our responses to them, as necessary, in appendixes III through VIII.  The agencies, with the exception of EPA, also provided technical  comments that we incorporated into the report, as appropriate.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution for 30 days from the  report date. At that time, we will send copies of this report to interested  congressional committees, the Secretaries of the Interior and Defense, and  the Administrator of the Environmental Protection Agency. The report will  also be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-3841 or mittala@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix IX.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This appendix details the methods we used to examine (1) the approaches  the Office of Surface Mining (OSM), the states we reviewed, and the Army  Corps of Engineers (Corps) have taken to obtain financial assurances for  surface coal mines with valley fills; (2) the extent to which federal and  state agencies monitor and evaluate these mines after reclamation and  mitigation are complete; and (3) the federal laws agencies may use, and  have used, to address any latent environmental problems associated with  these mines that may occur after Surface Mining Control and Reclamation  Act (SMCRA) or Clean Water Act financial assurances have expired.
This report focused on the four Appalachian states of Kentucky,  Tennessee, Virginia, and West Virginia because these areas account for  more than 83 percent of the surface coal production in Appalachia and  more than 98 percent of recently approved valley fills across the country.  The data on coal production is from the Energy Information  Administration and can be found at  http://www.eis.doe.gov/cneaf/coal/page/arc/table1.html. The data on valley  fills are based on permits approved from October 1, 2001, through June 30,  2005, as reported in Department of Interior, Office of Surface Mining  Reclamation and Enforcement, Environmental Impact Statement:  Proposed Revisions to the Permanent Program Regulations  Implementing the Surface Mining Control and Reclamation Act of 1977  Concerning the Creation and Disposal of Excess Spoil and Coal Mine  Waste and Stream Buffer Zones, OSM-EIS-34 (2008). We also gathered  background data on valley fills approved in the four states from January 1,  2000, through various dates in mid-2008 to mid-2009. The data from  Kentucky and West Virginia are drawn from GAO-10-21, Surface Coal  Mining: Characteristics of Mining in Mountainous Areas of Kentucky  and West Virginia. Neither Virginia nor Tennessee maintained valley fill  data in electronic form.  State officials provided fill data for Virginia and  OSM officials provided fill data for Tennessee by reviewing hardcopy  permits issued since 2000. We interviewed state and OSM officials about  the reliability of the data they provided and compared their results to  OSM’s 2008 environmental impact statement on excess spoil and stream  buffer zones. We determined the data were sufficiently reliable for our  purposes.
To address each of the objectives, we obtained documents from and  interviewed officials at several federal and state agencies. These included  officials in the Department of the Interior’s OSM in (1) headquarters; (2)  Appalachian Regional Office in Pittsburgh, Pennsylvania; and (3) field  offices in Lexington, Kentucky; Knoxville, Tennessee; Charleston, West  Virginia; and Big Stone Gap, Virginia. The OSM field office in Knoxville  manages the mining program in Tennessee. We also interviewed and  obtained information from officials in the Environmental Protection  Agency (EPA) headquarters and regional offices in Philadelphia,  Pennsylvania (Region 3) and Atlanta, Georgia (Region 4); officials in the  U.S. Geological Survey; and officials in the Corps of Engineers  headquarters and district offices in Louisville, Kentucky; Pittsburgh,  Pennsylvania; Nashville, Tennessee; Norfolk, Virginia, and Huntington,  West Virginia. Those five district offices are responsible for issuing and  enforcing the Clean Water Act section 404 permits to surface mines in the  states of Kentucky, Tennessee, Virginia, and West Virginia. Moreover, we  interviewed and obtained information from the following state agencies in  the four states we reviewed: the Kentucky Department for Natural  Resources; Kentucky Division of Water; Tennessee Department of  Environment and Conservation; Virginia Department of Mines, Minerals  and Energy; Virginia Department of Environmental Quality; and West  Virginia Department of Environmental Protection.
To describe the approaches OSM, the states, and the Corps have taken to  obtain financial assurances for surface coal mines with valley fills, we  reviewed relevant sections of SMCRA and OSM’s implementing regulations  and policy guidance to identify national requirements for financial  assurances associated with surface mining reclamation. We also reviewed  state mining laws in the three states that have primacy for administering  SMCRA—Kentucky, Virginia, and West Virginia—as well as those states’  mining agency implementing regulations and policy guidance, to identify  the states’ approaches to financial assurances for surface mining  reclamation established in accordance with the federal standards. We also  spoke with officials from OSM headquarters, the Appalachian Regional  Office, and field offices, as well as officials from the state mining agencies  in Kentucky, Virginia, and West Virginia. We spoke with officials from the  OSM field office in Knoxville to discuss financial assurances in Tennessee  because these officials manage the mining program in that state. We also  reviewed section 404 of the Clean Water Act and the Corps’ implementing  regulations and policy guidance to identify requirements and policy for  financial assurances associated with compensatory mitigation projects. In  addition, we contacted Corps officials in the headquarters and the five  district offices to identify the extent to which the Corps has included  financial assurance requirements in permits it has issued to surface mines  for valley fills. We also interviewed officials from the EPA to identify their  role and responsibility for overseeing section 404 permits.
To examine the extent to which federal and state agencies monitor and  evaluate surface coal mines with valley fills after reclamation and  mitigation are complete, we obtained information from and interviewed  officials in OSM’s Appalachian Regional Office and field offices, as well as  state officials at the mining agencies in Kentucky, Virginia, and West  Virginia to identify any routine monitoring and “one-time” evaluations that  these agencies have done of mine sites to assess the long-term  environmental impact of the reclamation after the SMCRA reclamation  bonds have been released. We also interviewed and obtained information  from officials in the Corps’ five district offices to identify any routine  monitoring the Corps has done of mitigation projects after determining  that operators have completed their mitigation obligations or any specific  studies of completed surface coal mine mitigation projects. In addition, we  interviewed and obtained information from officials in EPA’s Office of  Water in headquarters and regions 3 and 4; the U.S. Geological Survey; and  state water quality regulators in Kentucky, Tennessee, Virginia, and West  Virginia regarding any monitoring or evaluation of the long-term  environmental impact of former surface mines with valley fills. Among the  11 federal and state agencies that we interviewed, none replied that they  had done routine monitoring of this nature, and most replied that they had  not done any “one-time” studies. The few agencies that replied they had  done one-time studies referred us primarily to studies completed as part of  the 2003 draft multiagency programmatic environmental impact statement  (PEIS). OSM’s 2008 final environmental impact statement on proposed  regulations for excess spoil management also generally cited the 2003  draft PEIS as a source of information on the environmental impacts of  valley fills. The federal and state agencies that collaborated on the draft  PEIS conducted or funded more than 30 studies of the impacts of  mountaintop mining and associated valley fills and used them as support  for evaluating the impacts of various programmatic alternatives. With  these facts in mind, we relied heavily on the conclusions that the authors  of the draft PEIS drew concerning a number of environmental impacts,  including reforestation, water quality and impacts on aquatic organisms,  and water flow. We also cited more recent studies provided to us by  agency officials, such as a 2008 study by EPA Region 3 on water quality  and aquatic organisms near valley fills. Also, during the course of our  review, we learned from OSM officials about OSM’s evaluation of mine  operators’ compliance with approximate original contour policies in  Kentucky, Virginia, and West Virginia. We reported the results of those  evaluations because of their relevance to the construction of valley fills.
To examine the federal laws agencies may use, and have used, to address  any latent environmental problems associated with surface mines with  valley fills that may occur after SMCRA or Clean Water Act financial  assurances have expired, we analyzed SMCRA and the Clean Water Act  and identified provisions that provide mining agencies and water quality  regulators authority to address environmental problems on a former mine  site after SCMRA bonds have been released. We also interviewed officials  from OSM, state mining agencies, and state water quality regulators in the  four states we reviewed to learn the extent to which these authorities have  been used in the past to address any environmental problems that may  have occurred on or caused by a former mine site with valley fills. In  addition, we analyzed two other federal environmental laws—the  Comprehensive Environmental Response Compensation and Liability Act  (CERCLA, also known as Superfund) and the Resource Conservation and  Recovery Act (RCRA)—to identify provisions that may authorize or  require EPA to address environmental problems that may occur on or be  caused by a former surface mine after bonds have been released. We  interviewed officials from EPA’s Office of Solid Waste and Emergency  Response to learn if CERCLA had been used in the past in that context. We  also we reviewed an EPA regulatory determination published in 2000 on  whether regulation of coal combustion residue was warranted under the  hazardous substance provisions of RCRA.
We conducted this engagement from October 2008 to January 2010 in  accordance with all sections of GAO’s Quality Assurance Framework that  are relevant to our objectives. The framework requires that we plan and  perform the engagement to obtain sufficient and appropriate evidence to  meet our stated objectives and to discuss any limitations in our work. We  believe that the information and data obtained, and the analysis  conducted, provide a reasonable basis for any findings and conclusions in  this report.
section_title: Appendix II: Selected Surface Mining Control and Reclamation Act Reclamation Standards
paragraphs: The Surface Mining Control and Reclamation Act (SMCRA) requires that  mined land be reclaimed consistent with environmental performance  standards, including making the land available for post-mining uses. The  SMCRA permit process requires operators to submit detailed plans  describing the extent of the proposed mining operations and how  reclamation will be achieved. In reclaiming the land, operators must  comply with regulatory standards that govern, among other things, the  final contour of the reclaimed area, the revegetation of reclaimed mine  sites, and the quality of water leaving the mine site. This appendix  describes these key reclamation standards.
subsections: section_title: Standards for Approximate Original Contour
paragraphs: In general, mountaintop mine operators are required to return mine sites  to their approximate original contour (AOC) unless the operator receives a  variance from the regulatory authority. This means that the surface  configuration achieved by backfilling and grading of the mined area must  closely resemble the general surface configuration of the land prior to  mining and blend into and complement the drainage pattern of the  surrounding terrain, with all highwalls and spoil piles eliminated.
The Office of Surface Mining (OSM) and the states may grant a variance  from the requirement to return the site to AOC—meaning that the land  would be left relatively flat—in certain circumstances, including those in  which the operator can demonstrate that the site will be suitable for  certain post-mining land uses. According to OSM, these variances present  an opportunity to create relatively flat, flood-free land capable of  supporting economic development. In our recent report on trends in  mountaintop mining, we reported that variances from the AOC  requirement have been relatively rare in Kentucky and West Virginia.
A purpose of SMCRA is to assure that adequate procedures are undertaken  to reclaim surface areas as contemporaneously as possible with the  surface coal mining operations. OSM and the states require that backfilling  and grading begin within a certain number of days after coal removal in a  particular area.
section_title: Standards for Revegetation
paragraphs: OSM and state law and regulations for mine reclamation also address how  sites are to be revegetated after they have been backfilled and graded. To  obtain bond release under SMCRA, mine operators must show successful  revegetation 5 full years after the last year of augmented seeding,  fertilizing, irrigation, or other work. What is planted depends on the  approved post-mining land use, such as forestry or hayland and pasture.
State regulations set forth different requirements for factors including  plant species, variety, density, and coverage for different post-mining land  uses. The states have standards for the extent of vegetation that must be  initially planted and how much must survive in order to receive bond  release. For example, West Virginia’s regulations call for mines sites with a  forest land post-mining land use to be planted with at least 500 woody  plants per acre. This is to include at least 350 trees and 150 shrubs. The  state specifies that a least 5 species of trees be used, including at least 3  higher value hardwoods such as oak, ash, or maple. The state also  specifies a minimum success standard of at least 450 trees and shrubs per  acre and a 70-percent ground cover.
section_title: Standards for Water Quality
paragraphs: SMCRA requires that mine operators’ bonds be of an amount sufficient to  ensure the completion of the site’s reclamation plan by the regulatory  authority, which includes compliance with water quality standards. These  standards include those established by EPA or the states under the Clean  Water Act and referenced by SMCRA. Each reclamation plan is to include  a detailed description of the measures to be taken during the mining and  reclamation process to ensure the protection of the quality of surface and  ground water systems, both on- and off-site, from adverse effects of the  mining and reclamation process. OSM has stated that a reclamation bond  may not be released where active or passive water treatment systems are  being used to achieve compliance with applicable standards.
SMCRA regulations contain specific water protection requirements. The  regulations include requirements that all surface mining and reclamation  activities be conducted to minimize disturbance of the hydrologic balance  within the permit and adjacent areas and to prevent material damage to  the hydrologic balance outside the permit area. The hydrologic balance  requirements include standards for water quality and effluent limitations,  sediment control, siltation and discharge structures, and activities in or  adjacent to perennial or intermittent streams. Permit applicants must  submit a probable hydrologic consequences determination with their  permit application as well as a hydrologic reclamation plan indicating how  any probable hydrologic consequences will be prevented or remediated,  including how the general hydrologic balance requirements will be met. In  addition, the regulations that address backfilling and grading require  operators to cover acid- or toxic-forming materials with a minimum of 4  feet of nontoxic material, or treat the material to neutralize its toxicity in  order to prevent water pollution. With regard to excess spoil used as fill  material, the regulations require that leachate and surface runoff from the  fill will not degrade surface or ground waters or exceed effluent  limitations set for iron, manganese, total suspended solids, and pH. The  regulations also require that slopes be protected to minimize surface  erosion at the site and that the fill be designed using recognized  professional standards, certified by a registered professional engineer, and  approved by the regulatory authority.
section_title: Appendix III: Comments from the Department of the Interior
section_title: Appendix IV: Comments from the Department of Defense
paragraphs: The following are GAO’s comments on the letter dated December 15, 2009,  from the Assistant Secretary of the Army, Civil Works.
subsections: section_title: GAO Comments
paragraphs: 1.  While we appreciate the Army Corps of Engineers’ (Corps) sensitivity  to the litigation associated with the Spruce mine, we do not feel that  any change to our report is warranted. We do not specifically discuss  the litigation, which was brought by environmental groups against the  Corps, but rather an ancillary conflict between the Corps and the  Environmental Protection Agency (EPA). Our brief discussion of the  matter presents both sides of the conflict between EPA and the Corps  using the agencies’ own words sourced wholly from publicly available  documents and refrains from making any conclusions as to the merits  of the case. 2.  We disagree with the Corps’ comment that a discussion of projects  subject to the enhanced coordination procedure and the Spruce mine  are irrelevant to the objectives of our study. Both of these points are  relevant to our second objective, which asks us to describe the extent  to which federal and state agencies monitor and evaluate the impacts  of surface coal mining activities. Both the enhanced coordination  procedure and the Spruce mine case provide examples of how federal  regulators are using studies that we discuss in the report. Therefore,  we did not revise the report in response to this comment.
section_title: Appendix V: Comments from the Environmental Protection Agency
section_title: Appendix VI: Comments from the Kentucky Department for Natural Resources
paragraphs: The following are GAO’s comments on the letter dated December 17, 2009,  from the Commissioner, Department for Natural Resources.
subsections: section_title: GAO Comments
paragraphs: 1.  We do not agree that the report misrepresents or sensationalizes the  issues; however, we do agree that it is important to be accurate and  use correct terminology. Throughout the report we have strived to be  accurate and have been careful to consistently and accurately use  terms and phrases that are commonly used in regulation or the coal  mining literature. In its comment, the state did not provide specific  examples of what it believes are inaccurate facts or inappropriate  terms.  However, subsequent comments from the state referred to our  use of the terms mountaintop mining, mountaintop removal mining,  valley fills, and hollow fills.  We have reviewed our use of these terms  throughout the report to ensure that they are used consistently and  appropriately.  2.  The state is referring to our practice of holding “exit conferences” near  the end of our review. Our policy is to provide the agencies with  relevant program responsibilities—typically federal agencies but in  this case a state agency—with excerpted material from the draft  report. We call this document a “statement of facts.” The purpose of  the exit conference is to obtain the agency’s input regarding the  accuracy of the facts presented. The purpose is not to obtain  comments on the entire draft report; that step comes later in the  process. Therefore, the statement of facts that we sent to Kentucky  contained information describing laws, policies, and conditions that  pertained directly to the state. We understand that agencies are likely  to have additional comments on the full draft report—as Kentucky did  in this instance—but also believe that our process of holding exit  conferences to discuss the statement of facts followed by a request for  formal comments on the full report is a transparent one. 3.  We understand that Kentucky’s regulations define both hollow fills and  valley fills, but not all states make this distinction in practice. Federal  and state regulations identify different types of fills, including valley  fills, head-of-hollow fills, and durable rock fills. These definitions differ  in their characteristics, including placement, slope, and material  composition. For ease of reading, we refer to all types of fills as valley  fills in this report. The term valley fill is not meant to indicate the size  of a particular fill or the type of stream affected—ephemeral,  intermittent, or perennial. 4.  We agree with the state’s specific comment and have clarified the  report accordingly. In our discussion of post-mining land use  requirements, we are referring specifically to mountaintop removal,  one type of mountaintop mining. For further clarity, we have added a  footnote that compares the requirements for mountaintop removal to  those for steep slope mining, another kind of mountaintop mining.  Throughout the rest of the report, however, we continue to use the  term mountaintop mining to refer generally to all types of coal mining  in mountainous areas. This usage is consistent with our previous  report mentioned by the state (GAO-10-21) that was also recently  reviewed by state officials. This usage is also consistent with the  Environmental Protection Agency’s (EPA) 2003 draft Programmatic  Environmental Impact Statement on Mountaintop Mining/Valley Fills  in Appalachia.  5.  We agree that not all fills approved are ultimately constructed, and  make that point in the report. However, we do not believe that our  report overstates the miles of buried streams and did not modify the  report in response to this comment. The sources for the data that we  include in the report are the 2003 draft Programmatic Environmental  Impact Statement on mountaintop mining and valley fills and the  Office of Surface Mining’s 2008 final environmental impact statement  on excess spoil and the stream buffer zone.  For example, the 2003  draft statement reported that 724 miles of streams were “directly  impacted by valley fills (i.e., covered by fill).”  6.  We disagree with the comment. While we understand that some state  regulations require termination of jurisdiction at bond release, the  federal regulations only state that the relevant regulatory authority  may terminate its jurisdiction under the Surface Mining Control and  Reclamation Act (SMCRA) at bond release. Therefore, we have not  revised the report in response to the comment. 7.  We disagree with the comment.  SMCRA does not specifically prohibit  applicants from obtaining future SMCRA permits if they have previous  bond forfeitures. SMCRA generally prohibits applicants from obtaining  future permits if they have unabated violations. However, in response  to the comment, we have added detail on the state regulations, which  do specifically note that bond forfeiture based on violations that are  not subsequently corrected disqualify operators from obtaining future  permits. 8.  We did not modify the report in response to this comment because the  background section of the report does include data on the differences  in recent surface coal mine production in the four states. Specifically,  the report notes that Kentucky produced about 51 million tons while  Tennessee produced less than 2 million tons in 2008.  9.  This paragraph summarizes the section that follows, and we do not  agree that an editorial change is needed. We believe that our  description of the Army Corps of Engineers’ practices is accurate on  the basis of information obtained from that agency.  10. The citations on which the findings are based are provided later in the  body of the report. We did not add citations to this summary  paragraph. However, we have deleted the word “tentative” from our  discussion of impacts on water flows. We believe that the documents  we cite, along with comments we received from the Department of the  Interior, support our characterization in the final draft of the report. 11. We do not agree that the EPA statements are largely editorial and  made no change to them. We believe that the EPA and U.S. Geological  Survey statements on inadequate monitoring are as germane to the  purpose of the report as the statements from state agency officials,  who believe monitoring is adequate. 12. We have clarified the footnote to indicate that the mix of amphibian  and reptile populations was affected by the presence of mining. 13. We have not modified our characterization of the West Virginia Flood  Advisory Technical Task Force report because we believe it is an  accurate summary of the task force report. However, we have  modified the report to include Kentucky’s comment on its regulations  related to flood analysis and avoidance. 14. We have added this information to footnote 57.
section_title: Appendix VII: Comments from the Virginia Department of Mines, Minerals and Energy
paragraphs: The following are GAO’s comments on the letter dated December 22, 2009,  from the Director, Department of Mines, Minerals and Energy.
subsections: section_title: GAO Comments
paragraphs: 1.  We do not assume that post-bond release pollution discharges occur  below valley fills. In addition to the Pond-Passmore study, our draft  report cited the 2003 draft Programmatic Environmental Impact  Statement, which concluded that streams below mountaintop mines  with valley fills were characterized by contamination. We agree that  the contamination may not necessarily have been post-bond release,  and we agree that contamination problems are likely to be site  specific, when they occur. We did not revise the report in response to  this comment. 2.  The focus of this report was surface coal mining and not all activities  that may affect water quality. Therefore, while we agree that other land  disturbing activities may affect water quality in watersheds with  mining, we have not included a discussion of those activities. 3.  Points relating to hydrologic balance, such as effluent limitations, are  discussed throughout the report in general terms and more specifically  in Appendix II. We have added more detail on hydrologic balance  requirements to Appendix II in response to this comment. This  material is included in the appendix because, while we understand that  adherence to regulations designed to protect the hydrologic balance of  the mine site during the mining operation may help to minimize water  quality issues after bond release, we were asked to discuss  mechanisms available to address environmental problems after bond  release, when the Surface Mining Control and Reclamation Act’s  hydrologic balance requirements would no longer apply. 4.  We have not modified the report in response to the state’s comment  because we did not analyze the use of passive wetlands, or other  methods, for treating water after bond release.  5.  The state is correct that the 2003 draft programmatic environmental  impact statement was finalized in October 2005, and we have revised  footnote 2 to make that clear. The final version of the statement  incorporated the 2003 draft statement by reference. However, the 2005  final statement did not contain all of the material found in the draft  statement. For example, studies of the impacts of mountaintop mining  were in the appendixes of the 2003 draft, but not the 2005 final  statement. Therefore, we believe that it is preferable to refer the  readers of our report to the 2003 draft statement instead of the 2005  final statement.
section_title: Appendix VIII: Comments from the West Virginia Department of Environmental Protection
paragraphs: The following are GAO’s comments on the letter dated December 22, 2009,  from the Deputy Director, Division of Mining and Reclamation.
subsections: section_title: GAO Comments
paragraphs: 1.  We agree that mining nationwide has similar potential to impact the  environment. We also agree that the Surface Mining Control and  Reclamation Act requires financial assurances in all states. However,  we were asked to examine financial assurances and activities related  to monitoring at coal mines with valley fills. The four states we  reviewed have the vast majority of coal mines with valley fills.  Therefore, we did not revise the report in response to this comment. 2.  Our report notes that the state has made changes to its policies and  practices related to reforestation, approximate original contour, and  surface water runoff. We did not revise the report in response to this  comment. 3.  It is correct that we are not making any recommendations regarding  the length of the monitoring period before bond release. Our report  notes that most, but not all, agencies we contacted, believe that  monitoring is adequate. At the same time, there is evidence from some  monitoring that environmental problems may occur after bonds have  been released.  We did not revise the report in response to this  comment.
section_title: Appendix IX: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Robin Nazzaro (Director), Andrea  Wamstad Brown (Assistant Director), Sherry McDonald (Assistant  Director); Ross Campbell, Antoinette Capaccio, Brian Friedman, Brandon  Haller, Carol Hernstadt Shulman, and Desiree Thorp made key  contributions to this report. Josey Ballenger, Charlie Egan, Carol Kolarik,  and Rebecca Shea also contributed to this report.