Full Title: Reclamation of Coal Mining Operations: Select Issues and Legislation
Author(s): Lance N. Larson
Publisher(s): Congressional Research Service
Publication Date: November 17, 2020
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In the United States, coal mining operations supported economic growth and electrical power
generation needs throughout the 20th century. Prior to the enactment of the Surface Mining Control and Reclamation Act (SMCRA) in 1977, no federal law had authorized reclamation requirements for coal mining operators to restore lands and waters affected by mining practices. Title V of SMCRA authorized a federal regulatory program for coal mine operations after 1977. SMCRA also established the Office of Surface Mining Reclamation and Enforcement (OSMRE), within the Department of the Interior, as the federal agency responsible for implementing the requirements of SMCRA.
Given the recent decline in domestic coal production and bankruptcies of coal mining operators, some have raised concerns with the adequacy and types of performance bonds available to complete reclamation in the case of forfeiture. In the event that forfeited performance bonds are insufficient to complete site reclamation, the coal mining operator remains liable for remaining site reclamation costs. To the extent that those performance bonds would be insufficient for the regulatory authority to complete site reclamation presents a potential issue for how, or whether, state governments would fund the remaining site reclamation needs and address potential environmental and public health hazards. This raises a policy question for Congress regarding contributing federal funding for the reclamation of coal mining operations when the operator lacks adequate financial resources to complete reclamation and the performance bond is insufficient.
Self-bonding, authorized in SMCRA, allows coal mining operators to demonstrate that they have sufficient corporate assets to complete site reclamation, without requiring cash or collateral upfront as in the case of surety or collateral bonds. Recent bankruptcies in the coal mining industry have led to increased awareness of potential issues with the adequacy of self-bonds to complete site reclamation. In the event that a self-bond may be inadequate to complete site reclamation costs, the regulatory authority may be able to recover assets of the coal mining operator or third-party guarantor to cover the outstanding reclamation costs through a settlement or other agreement. The extent to which any funding recovered by the regulatory authority could complete the site reclamation would depend on the amount of assets recovered and the remaining reclamation needs.
In addition to bonding, this report discusses potential liability under other laws and issues associated with the remining of abandoned coal refuse.