[Federal Register Volume 67, Number 103 (Wednesday, May 29, 2002)]
[Rules and Regulations]
[Pages 37610-37626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13368]



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Part V





Department of the Interior





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Office of Surface Mining Reclamation and Enforcement



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30 CFR Part 948



West Virginia Regulatory Program; Final Rule

  Federal Register / Vol. 67, No. 103 / Wednesday, May 29, 2002 / Rules 
and Regulations  

[[Page 37610]]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Part 948

[WV-094-FOR]


West Virginia Regulatory Program

AGENCY: Office of Surface Mining Reclamation and Enforcement (OSM), 
Interior.

ACTION: Final rule; approval of amendment.

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SUMMARY: We are announcing our decision to approve an amendment and to 
remove required program amendments on the West Virginia surface coal 
mining regulatory program (the West Virginia program) under the Surface 
Mining Control and Reclamation Act of 1977 (SMCRA or the Act). The 
amendment we are approving concerns the deletion of a State provision 
that imposed a regulatory limitation on expenditure of funds for water 
treatment at bond forfeiture sites. The required program amendments we 
are removing concern the regulatory limitation on expenditure of funds 
for water treatment, and the effectiveness of West Virginia's 
alternative bonding system (ABS) in providing sufficient funds to 
complete reclamation, including water treatment, at all existing and 
future bond forfeiture sites.

EFFECTIVE DATE: May 29, 2002.

FOR FURTHER INFORMATION CONTACT: Mr. Roger W. Calhoun, Director, 
Charleston Field Office, 1027 Virginia Street East, Charleston, West 
Virginia 25301. Telephone: (304) 347-7158.

SUPPLEMENTARY INFORMATION:

I. Background on the West Virginia Program
II. Background on West Virginia's ABS
III. Submission of the Amendment
IV. OSM's Findings
V. Summary and Disposition of Comments
VI. OSM's Decision
VII. Procedural Determinations

I. Background on the West Virginia Program

    Section 503(a) of the Act permits a State to assume primacy for the 
regulation of surface coal mining and reclamation operations on non-
Federal and non-Indian lands within its borders by demonstrating that 
its program includes, among other things, ``* * * a State law which 
provides for the regulation of surface coal mining and reclamation 
operations in accordance with the requirements of the Act* * *; and 
rules and regulations consistent with regulations issued by the 
Secretary pursuant to the Act.'' See 30 U.S.C. 1253(a)(1) and (7). On 
the basis of these criteria, the Secretary of the Interior 
conditionally approved the West Virginia program on January 21, 1981. 
You can find background information on the West Virginia program, 
including the Secretary's findings, the disposition of comments, and 
conditions of approval of the West Virginia program in the January 21, 
1981, Federal Register (46 FR 5915). You can also find later actions 
concerning West Virginia's program and program amendments at 30 CFR 
948.10, 948.12, 948.13, 948.15, and 948.16.

II. Background on West Virginia's ABS

    On January 21, 1981, the Secretary conditionally approved West 
Virginia's ABS. The ABS has two basic components: the site-specific or 
incremental bond posted by the permittee and the Special Reclamation 
Fund (the Fund), comprised of a special reclamation tax, civil penalty 
assessments, and interest earned on the revenues, which is intended to 
cover any reclamation costs in excess of the site-specific or 
incremental bond.
    At the time of approval, the Secretary required that the State 
provide an actuarial study of the Fund demonstrating that the amount of 
money going into the Fund would cover the demands to be placed upon it, 
along with any program changes needed to redress any deficiencies 
identified by the actuarial study (46 FR 5956).
    The State submitted an actuarial study on October 29, 1982 
(Administrative Record Number WV-456). The study concluded that the 
Fund was solvent, in part, because it contained a funding mechanism 
(the special reclamation tax) to provide for the cost of future 
reclamation. On March 1, 1983 (41 FR 8447), we subsequently found that 
the State's alternative bonding provisions were in accordance with 
section 509(c) of SMCRA and the Federal criteria for approval of 
alternative bonding systems at 30 CFR 806.11(b), which has since been 
recodified as 30 CFR 800.11(e). Consequently, we removed the condition 
(25) relating to our approval of the State's ABS.
    By 1988-89, our oversight evaluations indicated that the Fund 
lacked sufficient revenue to reclaim all outstanding bond forfeiture 
sites. In addition, the cash balance in the Fund ceased earning 
interest because of losses suffered by the State's Consolidated 
Investment Fund. On October 1, 1991, we notified the State, pursuant to 
30 CFR 732.17(c) and (e), that a program amendment was necessary, 
because the Fund no longer met the requirements of 30 CFR 800.11(e).
    In a series of amendments beginning in 1993, West Virginia revised 
portions of its permanent regulatory program in an attempt to resolve 
some of our concerns. For example, the State increased its special 
reclamation tax from one cent to three cents per ton of coal mined and 
adopted site-specific bonding regulations. In addition, Deloitte and 
Touche, an accounting and consulting company, completed an actuarial 
study of the Fund in March 1993. The study concluded that the Fund had 
an accrual deficit position as of June 30, 1992, but that the Fund 
would realize gradual improvement over the next five years.
    On October 4, 1995 (60 FR 51900), we announced our partial approval 
of the State's amendments. However, as specified in 30 CFR 948.16 
(jjj), (kkk), and (lll), we also required the State to amend certain 
statutory provisions to fully eliminate the deficit in the Fund and to 
complete reclamation, including treatment of pollutional discharges, at 
all bond forfeiture sites.
    OSM and the State conducted additional studies that were completed 
in September 1997 and June 1999 to assess the financial condition of 
the Fund. The studies found that the Fund could eventually be solvent 
if its responsibilities were limited to land reclamation. However, the 
studies also determined that treatment of pollutional discharges from 
forfeited sites required additional revenue.
    By letter dated September 29, 2000, we informed the West Virginia 
Department of Environmental Protection (WVDEP) that Federal corrective 
action would be taken, unless the West Virginia Legislature 
(Legislature) adopted the necessary changes to the Fund to resolve the 
identified deficiencies (Administrative Record Number WV-1181). 
However, the Legislature adjourned on April 14, 2001, without enacting 
the proposed changes.
    On April 18, 2001, WVDEP requested additional time to develop and 
obtain approval of statutory and regulatory changes to the State's 
bonding provisions (Administrative Record Number WV-1206). In addition, 
WVDEP requested that we conduct an informal review of a report entitled 
``The Mountain State Clean Water Trust Fund.'' Under a plan that was 
based on the report, WVDEP intended to bifurcate the Fund into two 
distinct accounts, one for land reclamation and one for water 
treatment.
    In a letter dated June 29, 2001, we initiated corrective action 
under 30 CFR 733.12(b). In that letter, which is known

[[Page 37611]]

as a Part 733 notification, we notified the State that it must initiate 
certain remedial measures by July 27, 2001, to satisfy the outstanding 
required amendments at 30 CFR 948.16 (kkk), (jjj) and (lll) and that it 
must submit the necessary, fully-enacted and adopted statutory and 
regulatory revisions no later than 45 days after the end of the 2002 
regular session of the Legislature (Administrative Record Number WV-
1218). As stated in the letter, if West Virginia failed to take these 
measures, we intended to recommend that the Secretary partially 
withdraw approval of the State program and implement a partial Federal 
regulatory program.
    By e-mail message dated August 8, 2001, WVDEP provided us with 
additional draft legislative changes for informal review 
(Administrative Record Number WV-1233A). The proposed revisions are 
commonly called the 7-Up Plan.
    On August 9 and August 28, 2001, we provided WVDEP our informal 
review of the proposed statutory revisions that were submitted on 
August 8 (Administrative Record Nos. WV-1233 and WV-1235). Under the 
draft legislation, the special reclamation tax would be increased from 
3 cents to 14 cents per ton of clean coal mined for 39 months and 
reduced to 7 cents thereafter with biennial review by an advisory 
council.
    By letter dated August 13, 2001, WVDEP provided us with a schedule 
for submitting statutory and regulatory revisions to the Legislature in 
response to our Part 733 notification (Administrative Record Number WV-
1234). The letter specified that the State would formally submit the 
program amendment to us by April 30, 2002. The letter also indicated 
that the statutory changes could be presented to a special session of 
the Legislature before that date.
    We released our analysis of the State's draft legislation on 
September 7, 2001 (Administrative Record Number WV-1236). In that 
report, we concluded that the proposal would generate sufficient 
revenues for about 9 years, but future adjustments would have to be 
made to meet long-term needs of the Fund.
    On September 15, 2001, a special session of the Legislature passed 
Senate Bill 5003, which is intended to eliminate the deficit in the 
Fund and provide for reclamation, including water treatment, at bond 
forfeiture sites. The Governor of West Virginia (Governor) signed 
Enrolled Senate Bill 5003 on October 4, 2001. The effective date of the 
bill is October 4, 2001, but none of the provisions could be 
implemented without OSM approval.

III. Submission of the Amendment

    By letter dated September 24, 2001 (Administrative Record Number 
WV-1238), WVDEP formally submitted a proposed amendment to the West 
Virginia program consisting of revisions to the West Virginia Code (W. 
Va. Code), as amended by Enrolled Senate Bill 5003. The amendment added 
W. Va. Code section 22-1-17, which established the Special Reclamation 
Fund Advisory Council (Advisory Council). The amendment also revised W. 
Va. Code 22-3-11 by increasing the special reclamation tax rate and 
revised W. Va. Code 22-3-12 by deleting certain site-specific bonding 
provisions.
    We announced receipt of the proposed amendment on October 24, 2001 
(66 FR 53749 ). In the same document, we opened the public comment 
period and provided an opportunity for a public hearing or meeting on 
the adequacy of the amendment (Administrative Record Number WV-1243). 
The public comment period closed on November 23, 2001. We received 
comments from one environmental organization, a consultant to the 
environmental organization, one industry group, and two Federal 
agencies.
    By letter dated November 6, 2001, the West Virginia Highlands 
Conservancy (WVHC) requested that the comment period on the amendment 
be extended through December 14, 2001 (Administrative Record Number WV-
1245). On November 9, 2001, we denied the request (Administrative 
Record Number WV-1246). We denied the request for an extension because 
an extension would have delayed our decision, which could have resulted 
in a loss of revenues that are badly needed by the State for 
reclamation of bond forfeiture sites. The proposed amendments that we 
later approved increased the tonnage tax on clean coal mined that 
provides revenues to the Fund. The tax increase was scheduled to go 
into effect on January 1, 2002, but only if OSM approved the tax 
increase by that date. W. Va. Code 22-3-11(h), (n). Nevertheless, we 
agreed with WVHC's contention that the complexity of the questions 
raised by the amendment itself, and by comments submitted by WVHC and 
others, created the need for a longer comment period on the question of 
whether the amendments were sufficient to remedy the State's bonding 
program deficiencies on a long-term basis. Therefore, we elected to 
bifurcate our approval process for these amendments as follows.
    First, we published in the Federal Register, on December 28, 2001, 
our approval of the amendment submitted on September 24, 2001, because 
it afforded immediate improvement in the State's existing, approved 
ABS. 66 FR 67446. We also required that the State remove the regulatory 
limitation on expenditure of funds for water treatment at bond 
forfeiture sites (Administrative Record Number WV-1259).
    Next, we announced a 90-day comment period in the Federal Register 
on December 28, 2001, which also provided an opportunity for a hearing 
or meeting, on the issue of whether the amendments that we approved 
satisfy the required amendment at 30 CFR 948.16(lll) (Administrative 
Record Number WV-1262). 66 FR 67455. 30 CFR 948.16(lll) requires that 
the State ``eliminate the deficit in [its] * * * alternative bonding 
system and * * * ensure that sufficient money will be available to 
complete reclamation, including the treatment of polluted water, at all 
existing and future bond forfeiture sites.'' No one requested a hearing 
or meeting, so we did not hold one. The public comment period closed on 
March 28, 2001. During the reopening of the comment period, we received 
comments from one private citizen, one environmental group, one 
consultant, and one industry group.
    We are also including in this Federal Register document our 
decision on the State's response to the required program amendment 
codified at 30 CFR 948.16(jjj) that was submitted to us as part of a 
separate program amendment package dated April 9, 2002 (Administrative 
Record Number WV-1296A). We will address the remainder of the April 9, 
2002, amendment in a separate final rule document at a later date. A 
notice (67 FR 30336) announcing receipt and a 15-day public comment 
period on the program amendment that addressed the required amendment 
at 30 CFR 948.16(jjj) was published in the Federal Register on May 6, 
2002 (Administrative Record Number WV-1303). The public comment period 
closed on May 21, 2002. We received comments from one industry group 
and two Federal agencies.

IV. OSM's Findings

    For the reasons discussed below, we are removing the required 
program amendments codified at 30 CFR 948.16(jjj) and (lll).
    In our June 29, 2001, 30 CFR part 733 notification, we stated that 
West Virginia must initiate certain remedial measures to satisfy the 
outstanding required amendments at 30 CFR 948.16(jjj), (kkk), and 
(lll), and that the State must submit the necessary, fully

[[Page 37612]]

enacted and adopted statutory and regulatory revisions (Administrative 
Record Number WV-1218). As we announced in the December 28, 2001, 
Federal Register, the required program amendment at 30 CFR 948.16(kkk) 
was previously satisfied and, therefore, removed (66 FR 67446, 67450).
    We will discuss below how the State revised the West Virginia 
program to address the required program amendments codified at 30 CFR 
948.16(jjj) and (lll).

1. Required Program Amendment at 30 CFR 948.16(jjj)

    As of June 29, 2001, the date of our Part 733 notification to the 
State, this required amendment read as follows:

    30 CFR 948.16(jjj)--West Virginia must submit either a proposed 
amendment or a description of an amendment to be proposed, together 
with a timetable for adoption, to revise section 22-3-11(g) of the 
Code of West Virginia and section 38-2-12.5(d) of the West Virginia 
Code of State Regulations to remove the limitation on the 
expenditure of funds for water treatment or to otherwise provide for 
the treatment of polluted water discharged from all bond forfeiture 
sites.

    In response to this required program amendment, WVDEP submitted a 
program amendment by letter dated September 24, 2001, containing 
Enrolled Senate Bill 5003 (Administrative Record Number 1238). In that 
amendment, the State revised W. Va. Code 22-3-11(g) by deleting 
language that limited expenditures from the Fund for water treatment 
purposes to 25 percent of the Fund's gross revenues. As amended, W. Va. 
Code 22-3-11(g) provides, in part, that the Secretary of WVDEP may use 
the Fund for the purpose of designing, constructing and maintaining 
water treatment systems where they are required for complete 
reclamation of the affected lands.
    On December 28, 2001, we found that the deletion of the 25-percent 
limitation at W. Va. Code 22-3-11(g) partially satisfied the 
requirement codified at 30 CFR 948.16(jjj) (66 FR 67446, 67449). To 
fully satisfy this required amendment, the State also needed to delete 
the 25-percent limitation in its Code of State Regulations (CSR) at 38-
2-12.5(d). In addition, revised W. Va. Code 22-3-11(g) continued to 
provide that the Secretary of WVDEP ``may'' rather than ``shall,'' use 
the Fund for the purpose of designing, constructing and maintaining 
water treatment systems. Therefore, we revised 30 CFR 948.16(jjj) to 
reflect the statutory changes and to require the State to specify that 
the Fund must be used, where needed, to pay for water treatment on bond 
forfeiture sites. As revised on December 28, 2001, the required 
amendment at 30 CFR 948.16(jjj) reads as follows:

    30 CFR 948.16(jjj)--West Virginia must submit either a proposed 
amendment or a description of an amendment to be proposed, together 
with a timetable for adoption, to revise CSR 38-2-12.5(d) to remove 
the 25-percent limitation on the expenditure of funds for water 
treatment or to otherwise provide for the treatment of polluted 
water discharged from all bond forfeiture sites. In addition, the 
State must amend its program to specify that moneys from the Special 
Reclamation Fund must be used, where needed, to pay for water 
treatment on bond forfeiture sites.

    By letter dated February 26, 2002, WVDEP sent us a status report 
regarding its efforts to satisfy various required program amendments 
codified at 30 CFR 948.16 (Administrative Record Number WV-1276). In 
that letter, WVDEP stated that it had submitted proposed legislation to 
the Legislature to amend subsection CSR 38-2-12.5(d) to remove the 25-
percent limitation on the expenditure of funds for water treatment.
    However, WVDEP declined to change ``may'' to ``shall'' in W. Va. 
Code 22-3-11(g). According to WVDEP, making that change could remove 
the State's discretion to determine the appropriate forms of 
reclamation it could use by specifically mandating water treatment to 
the exclusion of land reclamation.
    When we revised 30 CFR 948.16(jjj) on December 28, 2001, we did not 
intend to require that water treatment be the exclusive means of 
correcting pollutional discharges on bond forfeiture sites. We 
acknowledge that other methods, such as land reclamation, might also be 
effective. Nor did we intend to require that monies from the Fund be 
spent to treat pollutional discharges regardless of whether there are 
other more beneficial and cost-effective means of abating or 
eliminating the pollutional discharge. Rather, we intended to require 
that the State clarify that the use of monies from the Fund for 
treatment of pollutional discharges on bond forfeiture sites, where 
needed, is mandatory.
    While the word ``may'' was not removed from the West Virginia 
program, the West Virginia Supreme Court of Appeals has determined that 
the WVDEP has a mandatory duty to use bond moneys for acid mine 
drainage treatment. State ex rel. Laurel Mountain v. Callaghan, 418 
S.E.2d 580 (1990). Moreover, in a subsequent decision, the Court held 
that W. Va. Code 22A-3-11(g), now codified as 22-3-11(g), imposes upon 
the WVDEP ``a mandatory, nondiscretionary duty to utilize moneys from 
the SRF [Special Reclamation Fund] * * *, to treat AMD [acid mine 
drainage] at bond forfeiture sites when the proceeds of the forfeited 
bonds are less than the actual cost of reclamation.'' State ex rel. 
West Virginia Highlands Conservancy, Inc. v. West Virginia DEP, 447 
S.E.2d 920, 925 (1994).
    In addition, current West Virginia program regulations at CSR 38-2-
12.4.d. state that:

    Where the proceeds of bond forfeiture are less than the actual 
cost of reclamation, the Secretary shall make expenditures from the 
special reclamation fund to complete reclamation. The Secretary 
shall take the most effective actions possible to remediate acid 
mine drainage, including chemical treatment where appropriate, with 
the resources available. (Emphasis added)

Moreover, the State defines ``completion of reclamation'' to mean, 
among other things, ``that all applicable effluent and applicable water 
quality standards are met * * *'' CSR 38-2-2.37. Hence, the State's 
program contains a mandatory requirement that Fund monies be used, 
where needed, for acid mine drainage treatment.
    In view of the litigation and the regulations discussed above, we 
conclude that the part of the required amendment at 30 CFR 948.16(jjj) 
that concerns use of moneys from the Fund for water treatment on bond 
forfeiture sites is no longer needed and can be removed.
    The other portion of the required amendment concerns the 25-percent 
limitation in the State's regulations. By letter dated April 9, 2002 
(Administrative Record Number WV-1296A), West Virginia sent us a 
proposed amendment that revised CSR 38-2-12.5.d. by deleting the 25-
percent limitation on expenditures from the Fund for water quality 
enhancement projects. The Legislature adopted this revision on March 9, 
2002, as part of the Enrolled Committee Substitute for House Bill 4163, 
which the Governor signed into law on April 3, 2002.
    The specific language that the State deleted read as follows:

    Expenditures from the special reclamation fund for water quality 
enhancement projects shall not exceed twenty-five percent (25%) of 
the funds gross annual revenue as provided in subsection g, section 
11 of the [West Virginia] Act.

    As amended, CSR 38-2-12.5.d. reads as follows:

    12.5.d. In selecting such sites for water quality improvement 
projects, the Secretary shall determine the appropriate treatment 
techniques to be applied to the site. The selection process shall 
take into

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consideration the relative benefits and costs of the projects.

    We find that the amendment to CSR 38-2-12.5.d. satisfies the part 
of the required amendment at 30 CFR 948.16(jjj) that concerns the 
deletion of the 25-percent limitation from the State rules. Therefore, 
we find that 30 CFR 948.16(jjj) has been fully satisfied and can be 
removed.

2. Required Program Amendment at 30 CFR 948.16(lll)

    This required amendment reads as follows.

    30 CFR 948.16(lll)--West Virginia must submit either a proposed 
amendment or a description of an amendment to be proposed, together 
with a timetable for adoption, to eliminate the deficit in the 
State's alternative bonding system and to ensure that sufficient 
money will be available to complete reclamation, including the 
treatment of polluted water, at all existing and future bond 
forfeiture sites.

    In essence, it requires that West Virginia modify its ABS to (A) 
eliminate the deficit and (B) ensure that sufficient money will be 
available to complete land and water reclamation on all existing and 
future bond forfeiture sites. This requirement corresponds to 30 CFR 
800.11(e)(1), which provides that alternative bonding systems must 
``assure that the regulatory authority will have available sufficient 
money to complete the reclamation plan for any areas which may be in 
default at any time.''
A. Elimination of the Deficit
    Special Reclamation Tax Rate Increase. On December 28, 2001, we 
approved an amendment to W. Va. Code 22-3-11(h) that increased the 
special reclamation tax rate from 3 cents per ton of clean coal mined 
to 7 cents per ton of clean coal mined. This subsection also levies an 
additional temporary tax of 7 cents per ton of clean coal mined for a 
period not to exceed 39 months. Collection of both taxes began on 
January 1, 2002. At the current coal production rate in West Virginia, 
these tax rate increases will increase cash flow into the Fund by about 
$1.8 million per month. According to WVDEP, the Fund had a deficit of 
approximately $47.9 million in December 2001. Therefore, the deficit in 
the Fund should be eliminated in about three years.
    Prohibition to Reduce Reclamation Tax Rate. On December 28, 2001, 
we approved an amendment to W. Va. Code 22-3-11(h) that provides that 
the 7-cent permanent tax rate may not be reduced until the Fund has 
sufficient moneys to meet the State's reclamation responsibilities 
under W. Va. Code 22-3-11. This provision provides a safeguard to 
prevent a premature reduction in the 7 cents per ton permanent tax 
rate.
    Special Reclamation Fund Advisory Council. On December 28, 2001, we 
approved new W. Va. Code 22-1-17, which created the Special Reclamation 
Fund Advisory Council (Advisory Council) to ensure ``the effective, 
efficient and financially stable operation of the special reclamation 
fund.'' One of the main tasks of the Advisory Council is the 
elimination of the ABS deficit. It must also ensure that the Fund 
remains solvent once the deficit is eliminated.
    The Advisory Council will have eight appointed members representing 
multiple interests in the State, including the Secretary of WVDEP, the 
State Treasurer, the Director of the National Mine Land Reclamation 
Center, the coal industry, an actuary or an economist, the 
environmental community, coal miners and the general public.
    By letters dated March 29, 2002 (Administrative Record Number WV-
1298), WVDEP asked for nominations of people to serve on the Advisory 
Council. The letters were sent to various groups with an actual or 
potential interest in the solvency of West Virginia's ABS. After the 
initial appointments, subsequent members will serve a full six-year 
term. The initial terms of all members will begin on July 1, 2002 (W. 
Va. Code 22-1-17(c)).
    The Advisory Council has the following specific duties:
    1. Study the effectiveness, efficiency and financial stability of 
the Fund, and develop a financial process that ensures the long-term 
stability of the special reclamation program;
    2. Identify and define problems associated with the Fund;
    3. Evaluate bond forfeiture collection and reclamation efforts;
    4. Provide a forum to discuss issues relating to the Fund;
    5. Contract with a qualified actuary to determine the Fund's fiscal 
soundness; and
    6. Study and recommend to the Legislature and the Governor 
alternative approaches to the current funding scheme.
    To accomplish these mandates, we anticipate that the Advisory 
Council will analyze data provided by WVDEP and others; monitor current 
income and expenditures from the Fund; review and evaluate WVDEP's 
estimates of future reclamation costs and water treatment obligations; 
consider alternative means of financing the Fund's reclamation 
responsibilities so as not to make it entirely dependent upon a coal 
production tax; project revenues; and consider the findings of the 
actuary and other experts regarding the fiscal soundness of the Fund.
    Annual Reports to the Legislature and the Governor. As provided by 
W. Va. Code 22-1-17(g), the Advisory Council must report annually to 
the Legislature and the Governor on the adequacy of the special 
reclamation tax and the fiscal condition of the Fund. At a minimum, the 
report must contain--

    a recommendation as to whether or not any adjustments to the 
special reclamation tax should be made considering the cost, 
timeliness and adequacy of bond forfeiture reclamation, including 
treatment.

To prepare this report, the Advisory Council will have to study the 
effectiveness of the tax rate to eliminate the deficit of the Fund. To 
do so, the Advisory Council will have to determine current and 
anticipated bond forfeiture reclamation obligations, including water 
treatment.
    As noted by some commenters, we recognize that there are 
inaccuracies and gaps in the data currently available. We are 
continually revising our acid mine drainage (AMD) inventories. For 
example, we do not know how many bond forfeiture sites with pollutional 
discharges will require perpetual water treatment. Projected treatment 
costs at this time are gross estimates based on water treatment models, 
rather than individual site-specific designs of treatment systems. 
Until more and better information is obtained on each site, the number 
of discharges requiring treatment and the kinds of treatment systems 
required to abate the pollution will be in a state of flux. To the 
extent that resources allow, we intend to work with WVDEP to assist the 
Advisory Council in obtaining the data it will need to do its job.
    It would be ideal if the State could provide sufficient revenue to 
immediately eliminate the deficit. It would also be ideal if necessary 
land reclamation and water treatment projects at bond forfeiture sites 
could be completed immediately. However, such immediate financial 
relief may have required the State to obtain monies from the State's 
general revenue fund. To avoid placing any financial burden on the 
public for these reclamation obligations, the State chose to make 
adjustments in the special reclamation tax assessed against the coal 
industry. In addition, logistical and contractual limitations mean that 
it would not be possible to immediately reclaim all the land that needs 
to be reclaimed and treat all the water that needs to be treated. To 
accomplish the necessary

[[Page 37614]]

land reclamation and water treatment, the State will need time to 
develop specifications, bid and award contracts, secure necessary 
easements and permits, and design and construct needed treatment 
facilities.
    With the adoption of special reclamation tax rate increases and the 
creation of the Advisory Council, West Virginia has created a fiscally 
sound mechanism to eliminate the deficit in the Fund within a 
reasonable period of time. Therefore, we find that West Virginia has 
satisfied the first part of the required program amendment codified at 
30 CFR 948.16(lll).
B. Ensure Sufficient Money Will Be Available To Complete Existing and 
Future Bond Forfeiture Reclamation
    At 30 CFR 948.16(lll), we also required that West Virginia improve 
its ABS to ensure that sufficient money will be available to complete 
land and water reclamation at existing and future bond forfeiture 
sites, a requirement that parallels the criterion for approval of an 
ABS under 30 CFR 800.11(e)(1).
    As discussed above, the current deficit in the ABS should be 
eliminated in about three years. If current estimates of the Fund's 
deficit are in error, the Advisory Council must recommend changes to 
the Legislature and the Governor to assure that the deficit is 
eliminated in a timely manner.
    With respect to future reclamation obligations, the Advisory 
Council has an obligation under State law to monitor the Fund, address 
funding-related issues, and recommend measures to ensure the long-term 
solvency of the Fund. Specifically, W. Va. Code 22-1-17(f)(1) provides 
that the Advisory Council must study the effectiveness, efficiency and 
financial stability of the Fund with an emphasis on ``development of a 
financial process that ensures the long-term stability of the special 
reclamation program.''
    In addition, W. Va. Code 22-1-17(f)(6) provides that the Advisory 
Council must ``[s]tudy and recommend to the Legislature alternative 
approaches to the current funding scheme of the special reclamation 
fund, considering revisions which will assure future proper reclamation 
of all mine sites and continued financial viability of the state's coal 
industry.'' We interpret this provision as meaning that, instead of 
relying solely on a coal production tax, the Advisory Council must 
examine and recommend other funding mechanisms such as a sinking fund, 
insurance, trust fund, or escrow accounts to meet future bond 
forfeiture reclamation obligations.
    With the establishment of the Advisory Council and the requirement 
that the Council make recommendations to the Legislature and the 
Governor on appropriate methods of financing existing and future ABS 
reclamation obligations, West Virginia has created a mechanism whereby 
the State has the capability to maintain its ABS in a manner consistent 
with 30 CFR 800.11(e)(1). Therefore, we find that West Virginia has 
satisfied the required program amendment codified at 30 CFR 
948.16(lll). However, we recognize that the mechanism adopted by the 
State does not ensure implementation of the Advisory Council's 
recommendations, which must be approved by the Legislature and the 
Governor before they can take effect. In the event that the Legislature 
and the Governor do not approve the Council's recommendations, we will 
reevaluate the adequacy of the State's ABS and, if appropriate, provide 
notification to West Virginia under 30 CFR 732.17(c) and (e) that it 
must amend its program to restore consistency with Federal 
requirements. With this caveat, we are removing the required amendment 
at 30 CFR 948.16(lll).

V. Summary and Disposition of Comments

Public Comments

    In response to our request for comments from the public on the 
proposed amendment (see Section III of this preamble), we received 
comments from the WVHC; Morgan Worldwide Mining Consultants, Inc. 
(Morgan Consultants), a consultant for the WVHC; the West Virginia Coal 
Association, Inc. (WV Coal Association) and Working On People's 
Environmental Concerns (WOPEC), an environmental consultant. Our 
summary and disposition of those comments appear below.

1. Advisory Council

    WVHC expressed doubts as to the constitutionality of the Advisory 
Council established by the legislation, stating that the council 
appears to violate provisions of the West Virginia Constitution 
relating to separation of powers. According to WVHC, in devising the 
council, the Legislature gave itself the power to appoint members to 
what is essentially an executive body and limited the Governor to 
approving council members proposed by outside entities. WVHC also 
expressed concern regarding possible bias within the council, stating 
that the makeup and appointment scheme associated with the council will 
no doubt be skewed in favor of industry.
    As a Federal agency, we have no authority to evaluate issues 
relating to interpretation of the West Virginia Constitution. Unless 
and until the State courts rule otherwise, we must and will presume 
that legislation adopted by the Legislature and signed by the Governor 
meets all State constitutional requirements. However, the Advisory 
Council, which is a multi-interest board, is not much different from 
other multi-interest boards in West Virginia. The members are appointed 
by the Governor with the advice and consent of the Senate. All West 
Virginia advisory boards that we are aware of are created the same way. 
The various interest groups identified in the statute merely nominate 
potential members. Only two of the eight members of the Advisory 
Council must represent the coal industry.
    WVHC stated that OSM may not approve a potentially inadequate 
proposal by delegating responsibility for any necessary future revenue 
adjustments to an advisory council. According to WVHC, we may only 
approve an ABS that is fully sufficient, at the time of approval, to 
cover all potential defaults.
    We disagree with these assertions. We believe that as long as the 
amendment provides a mechanism for remedying ABS inadequacies in a 
reasonable fashion, we can approve it as being consistent with 30 CFR 
800.11(e), which establishes the criteria for approval of alternative 
bonding systems. 30 CFR 800.11(e)(1) provides that the ABS ``must 
assure that the regulatory authority will have available sufficient 
money to complete the reclamation plan for any areas which may be in 
default at any time.'' The commenter asserts that monies must be made 
available immediately to cover all potential defaults. We believe that 
it is not reasonable, because there is currently no way to immediately 
predict with certainty future bond forfeitures and future water 
treatment obligations. 30 CFR 800.11(e)(1) requires that sufficient 
money ``be available,'' but it does not specify that the money must be 
immediately available. As we stated in Finding 2, it would be ideal if 
the State could provide sufficient revenue to immediately eliminate the 
deficit in the Fund and cover all potential defaults. However, even if 
the necessary funds were immediately available, it would not be 
possible to reclaim immediately all the land that needs to be reclaimed 
and treat all the water that needs to be treated due to manpower, 
logistics, planning and contractual limitations. To accomplish the 
necessary land reclamation and water treatment, the

[[Page 37615]]

State will need time to bid and award contracts, secure necessary 
easements and permits, design and construct needed treatment 
facilities.
    The increased special reclamation tax rate will be sufficient to 
eliminate the Fund deficit in about three years. We believe that is a 
realistic time frame, given the limitations discussed above. The 
legislation also requires the Advisory Council to develop 
recommendations for the Legislature and the Governor on ways to ensure 
that the Fund remains solvent on a permanent basis. As noted in Finding 
2, we found that arrangement to be a satisfactory method of meeting the 
criteria in 30 CFR 800.11(e)(1). If the Legislature or the Governor 
fail to adopt or implement the Advisory Council's recommendations, we 
will take action under 30 CFR 732.17(c) and (e), if appropriate.

2. Future Water Treatment Cost Estimates

    WVHC stated that our September 7, 2001, analysis is faulty, and 
that the legislative changes will not eliminate the ABS deficit. WVHC 
asserted that our analysis is not a substitute for an objective, 
professional, and rigorous actuarial analysis. WVHC asserted that 
because the recently approved amendments to the Fund do not require an 
actuarial study until December 31, 2004, the WVDEP has no idea what its 
true liabilities are and that there is no rational basis for concluding 
that the proposed tax increases are sufficient to satisfy liabilities.
    WVHC stated that, even if OSM's analysis is accurate, that report 
concludes that the proposed amendments would only result in a positive 
Fund balance for about nine years. After that time, the Fund would be 
in deficit every subsequent year. Therefore, WVHC argued, the 
amendments fail to meet the standard in 30 CFR 800.11(e)(1), which 
requires that the ABS have ``sufficient money to complete the 
reclamation plan for any areas which may be in default at any time.''
    Our September 7, 2001, analysis represents a best estimate at the 
time, given the data provided by WVDEP. Since that analysis, WVDEP has 
continued to improve the quantity and quality of its data on current 
costs and estimates of future bond forfeiture land and water 
reclamation costs. Consequently, WVDEP's analysis, as well as our 
understanding of the Fund and its ability to meet bond forfeiture 
obligations, is improving. Estimating bond forfeiture rates and long-
term water treatment obligations is a very speculative endeavor.
    We agree with the commenter that our September 7, 2001, analysis is 
not a substitute for an objective, professional, and rigorous actuarial 
analysis of the Fund and its reclamation obligations and costs. The 
legislation requires that the Advisory Council contract for an 
actuarial analysis on a regular basis, with the first to be completed 
by December 31, 2004. That due date coincides with the approximate time 
that our estimates indicate that the Fund's deficit will be eliminated 
by the recent increases in the special reclamation tax rate. Therefore, 
the first determination from the professional actuary will be timely 
from the perspective of assuring that the Fund's deficit is fully 
eliminated because that determination will provide the Advisory Council 
with the information it needs concerning recommending measures to 
ensure its complete elimination.
    With respect to the future, the legislation created the Advisory 
Council to study the issue, monitor the Fund, and develop 
recommendations to ensure long-term solvency. As discussed in Finding 
2, we believe that the legislation thus establishes a mechanism whereby 
the Fund can meet the criteria of 30 CFR 800.11(e)(1).
    Our responses to specific comments follow.
a. Actuarial Analysis of the Fund
    WVHC stated that a proper actuarial analysis of the Fund has never 
been done, and that a preliminary study done in 1982 was inadequate.
    We disagree with this comment. The State submitted an actuarial 
study on October 29, 1982, and Deloitte and Touche completed an 
actuarial study of the Fund in March 1993. The 1982 actuarial study 
found that the Fund was solvent, because it contained a funding 
mechanism (the special reclamation tax) to provide for the cost of 
future reclamation. OSM subsequently found the State's ABS provisions 
to be in accordance with section 509(c) of SMCRA and the Federal 
regulations. The Deloitte and Touche study concluded that the Fund had 
an accrual deficit position as of June 30, 1992, but that the Fund 
would realize gradual improvement over the next five years. 
Unfortunately, that study proved to be wrong.
b. Estimate of Fund Liabilities.
    WV Coal Association stated that our September 7, 2001, analysis 
grossly overestimated the liabilities associated with the Fund. 
However, WVHC asserted that WV Coal Association produced no documents 
in several areas where WV Coal Association claimed that OSM 
overestimated costs. Thus, WVHC argues, many of WV Coal Association's 
assertions are unsupported by any documents or written analysis and 
appear to be nothing more than speculation.
    We see no need to determine whether either commenter is correct. 
The legislation adopted in 2001 provides a means for further study of 
the issue and adjustments, as appropriate.
c. Estimated Annual Water Treatment Cost Increase.
    WVHC stated that our September 7, 2001, analysis is faulty because 
we projected that costs for water treatment would increase $230,000 per 
year rather than $2.462 million per year as top WVDEP officials 
indicated.
    Further, WVHC stated that WVDEP's annual costs at just five sites 
increased from $0.29 million in FY 1985-86 to $3.72 million in FY 1999-
2000. This is an increase of $3.43 million in fourteen years, or about 
$245,000 per year. Thus, the WVHC claims that the increased costs at 
these five sites by themselves exceed OSM's estimate, without even 
considering the additional treatment costs at future forfeited sites.
    WV Coal Association stated that it believes OSM's $230,000 estimate 
is the best estimate since it is based on 20 years of mining activity.
    We discussed annual treatment costs with WVDEP officials when 
preparing our analysis of the 7-Up Plan and had an understanding that 
the $2.462 million was an annual estimated cost repeated every year at 
the same rate, rather than a cumulative cost to be added each year. To 
assume the latter would be to assume that almost all permits where acid 
mine drainage is being treated, would be forfeited. We do not believe 
that assumption to be a reasonable expectation. Rather than using a 
one-time $2.462 million cost, we based our estimate of future costs on 
known historical costs. Over the past 20 years, the State has forfeited 
bonds where water treatment, if it were to occur, would cost 
approximately $4.6 million over the 20-year period. This equates to 
$230,000 per year. We are not certain that the WVHC estimate of a 
$245,000 increase in cost per year is supported by facts related only 
to water treatment. However, our calculations were based only on data 
concerning water treatment. The $230,000 is a 20-year average, but 
there could have been spikes in costs during some years.
    WVHC also stated that, even if we were correct in assuming that 
water treatment liability would increase by

[[Page 37616]]

$230,000 per year, our spreadsheet does not apply that assumption. 
Instead, the commenter stated, we only increased the water treatment 
liability figure by $230,000 in three years-- 2002, 2003 and 2004.
    In response, we agree that we had made this inadvertent programming 
error. However, even with this correction, our basic conclusion remains 
the same. The Fund will eliminate the deficit and retain a positive 
balance for a few years. We agree that a more thorough analysis is 
necessary to estimate costs and make long-term predictions, which is 
exactly what the new Advisory Council has been charged to do.
d. Trend in Number of Permits That Produce Acid Mine Drainage (AMD)
    WVHC stated that we were mistaken when we stated, on page 3 of our 
September 7, 2001, analysis, that ``there has actually been a downward 
trend in the number of new permits issued that have generated water 
pollution over at least the last ten years (Appendix IV).'' The trend, 
the WVHC stated, is one of increasing numbers of active sites with AMD 
discharges and declining assignment of those sites to the bond-
forfeiture column. According to the WVHC, this creates a huge potential 
liability that is much worse now than it was in 1982. In addition, the 
WVHC asserted, the older the site, the greater the risk of bond 
forfeiture, since the mines are less likely to be producing coal and 
revenue.
    In the chart to which this commenter refers, we were merely 
attempting to show how many of the permits issued for each year between 
1982 and 1996 developed an AMD condition. The table indicates that 
fewer permits issued in 1996 developed AMD than did permits issued in 
preceding years and that there is a declining trend from 1982 to 1996. 
However, the commenter is correct that the universe of sites with AMD 
has grown since 1982 and, therefore, the reliance on historic data may 
not be the best tool for evaluating long-term needs. We agree that 
there is a need for more data and a rigorous data analysis. The State 
program amendment that we approved on December 28, 2001, provides for 
such actions through the tasks assigned to the Advisory Council.
    WVHC stated that our assertion that the water treatment problem is 
decelerating is directly inconsistent with our statement on September 
3, 1999, that ``[t]his problem is accelerating with the continued 
forfeiture of performance bonds that require water treatment.''
    The commenter has misinterpreted our September 3, 1999, letter. The 
``problem'' we referred to in that letter is the increasing inability 
of the Fund to meet its obligations. That is, the Fund was falling 
deeper into debt. We did not state, nor imply, as the comment suggests, 
that the rate of bond forfeiture sites requiring water treatment is 
increasing.
e. Comparison of OSM's Analysis With Other Studies
    WVHC stated that our analysis is inconsistent with the conclusions 
of WVDEP's economic consultants in their draft February 2001 report 
entitled ``The Mountain State Clean Water Trust Fund.'' WVHC asserted 
that the report calculated that guaranteeing payment of future water 
treatment costs would require firms currently treating water to pay 
roughly $35.9 million annually. In contrast, the 7-Up Plan would 
generate revenues of only $20.79 million for the first three years, 
declining to $8.82 million thereafter.
    This comment inappropriately compares two plans that are 
fundamentally different and not directly comparable. The goal of the 
``Mountain State Clean Water Trust Fund'' was to create a trust fund to 
pay for water treatment costs on active mine sites as well as for bond 
forfeitures. The 7-Up Plan, however, is designed to pay the reclamation 
and water treatment costs for only revoked permits where the forfeited 
bond is not sufficient to do so. The 7-Up Plan is not designed to pay 
the water treatment costs of sites while they are active, i.e. while 
they are still under a permit. The $35.9 million water treatment cost 
estimate mentioned in the Trust Fund report has no direct comparison to 
the costs predicted in our September 7, 2001, analysis.
f. Analysis Reporting Methods
    WVHC stated that our reporting is unconventional and makes it 
impossible to determine the cumulative effect of the increased tax on 
the Fund balance. According to the commenter, we also confused revenues 
with liabilities. As a result, the WVHC asserted, the net end-year 
balance in 2022 should be a negative $61.42 million, rather than the 
negative $7.75 million in our table.
    This comment indicates a lack of understanding of the nature of 
water treatment. Water treatment is an operating cost that does not 
accumulate if the water is not treated in any given year. The only 
figures that should be accumulated as increasing debt are the capital 
costs. In any event, a cumulative negative figure is important as an 
indicator of when the Fund needs to be adjusted to assure sufficient 
revenue for water treatment or capital construction. We concur that the 
new Advisory Council must gather data and evaluate the adequacy of the 
Fund's ability to cover water treatment.
    WVHC stated that we assumed that WVDEP's water treatment liability 
would not increase for the first two years, and would be limited to its 
actual current costs of $1.5 million. WVHC asserted that we based this 
assumption on the premise that WVDEP could not begin increased water 
treatment until more money became available from the increased special 
reclamation tax. However, WVHC stated, it would not take two years to 
generate more funds for water treatment and WVDEP has an obligation to 
begin reclamation of AMD within 180 days after bond forfeiture. As a 
result of this error, the water treatment costs in the first two years 
are underestimated by $3 million. Consequently, according to the 
commenter, the cumulative deficit will grow to $141.06 million by 2022, 
and only one year (2005) shows a surplus. In addition, Morgan 
Consultants stated that the data indicate that the Fund has negative 
balances in the first two years and therefore has no ability to 
complete reclamation of any bond forfeiture sites during that period.
    Our assumption to limit water treatment costs to $1.5 million in 
the first two years is reasonable. The $1.5 million estimate is the 
State's current, actual annual operating costs. We expect this level of 
expenditure to continue until the increased tax revenues have had time 
to accumulate, and the State has had time to bid and award contracts, 
secure necessary easements and permits, design and construct needed 
treatment facilities, and begin treatment. It is not reasonable to 
assume that full treatment will begin immediately on all backlogged 
sites requiring treatment. We recognize that the current estimate of 
treatment costs is based on very limited data and a formula for 
estimating costs. WVDEP needs to collect data showing seasonal 
variation at sites requiring water treatment, and it must increase 
staff or hire contractors for site-specific designs of those treatment 
systems. Although WVDEP has an obligation under CSR 38-2-12.4.c. to 
begin reclamation within 180 days after bond forfeiture, that has not 
happened in all instances. However, we believe that the revisions to 
the State's ABS that we approved on December 28, 2001, will allow the 
State to eliminate that deficit and to begin treating pollutional 
discharges at all bond forfeiture sites. If changes in the tax rate are 
necessary to assure

[[Page 37617]]

elimination of the deficit, the revised ABS provides for the Advisory 
Council to recognize that need and to make appropriate recommendations 
to the Legislature and the Governor concerning needed adjustments to 
the special reclamation tax rate.

3. Methods Used to Estimate Water Treatment Costs

a. Cost Estimate of Reclaiming Bond Forfeiture Sites With AMD
    WVHC stated that WVDEP has grossly underestimated the costs of 
reclaiming bond forfeiture sites with AMD. WVHC also stated that WVDEP 
used a methodology that its own consultant criticized as inaccurate.
    WV Coal Association stated that we overestimated the capital 
operating costs for water treatment at bond forfeiture sites. For 
example, WV Coal Association stated, sediment ponds and needed roads 
would likely already be in place at sites where proper inspection and 
enforcement had mandated adherence to the mining permit. In addition, 
WV Coal Association stated that we over estimated the costs associated 
with powering water treatment systems. The majority of water treatment 
devices in use in West Virginia, the WV Coal Association asserted, are 
powered by the natural flow of water (similar to a water wheel) and 
require no electrical power source.
    WV Coal Association argues that annual treatment costs will be 
reduced for two other reasons. The first reason is that ``the material 
that would likely lead to AMD as water leaches through the mining spoil 
is [typically] encapsulated on the bench area of the mine and isolated 
from water sources.'' The second is that ``WVDEP will rarely issue a 
permit where the generation of AMD is anticipated.''
    In response, we acknowledge the difficulty of obtaining accurate 
reclamation cost estimates. Program liability cost estimates, derived 
from current WVDEP inventory data, are at best gross estimates that may 
either underestimate or overestimate the actual program liability 
costs. A number of factors, such as costing methodology and water 
quality data limitations, influence the accuracy of cost projections. 
Water quality data used with the inventory was obtained from the WVDEP 
bond forfeiture water quality database that includes analytical data 
from water samples collected by WVDEP staff and consultants. Water 
quality data can be negatively affected by insufficient samples to 
characterize the discharge, lack of seasonal variation data, adequacy 
of sampling protocol and accuracy of flow measurements, etc. However, 
we believe that WVDEP's inventory data will improve significantly over 
time as WVDEP gains new knowledge and experience and as it identifies 
the costs associated with planning, developing, installing, and 
treating bond forfeiture sites with AMD.
b. Methodology for Determining Loadings
    WVHC stated that WVDEP's method of cumulating AMD loadings is 
incorrect. Quoting from OSM's December 2000 draft ``Appalachian Region 
AMD Inventory,'' WVHC stated that ``[a]cid loading is a function of the 
volume of flow from the discharge times the amount of pollutants 
contained in the discharge.'' WVHC also stated that WVDEP assumes that 
treatment cost is a simple function of cumulating the product of flow 
times concentration across all sites, and calculating cost as a 
function of the total loading. However, WVHC asserted, WVDEP's own 
consultant has stated that because many sites use a variety or 
combination of chemicals depending on flow volume or quality, 
temperature, availability, or a host of other factors, loads and flow 
cannot be summed, and the entire matrix must be viewed as non-
cumulative.
    In response, we acknowledge that each site requires its own 
analysis. We believe both WVDEP's and our analyses are simply methods 
to obtain rough cost estimates for overall planning purposes. Further 
refinement of actual treatment costs will take time and more site-
specific data than is currently available. WVDEP must continually 
update its data and collect this kind of information.
c. Flow Data
    WVHC stated that WVDEP's flow data is incorrect. WVHC stated that 
WVDEP's flow data is based on single sampling events during the driest 
month of a record drought year. WVHC stated that at a minimum, the data 
should be adjusted to account for the variability of flow, and the 
potential for higher flows in wetter years, and therefore, higher 
treatment costs must be considered.
    WVHC stated that WVDEP based its analysis of flow data on the 1998 
AMD inventory report. Chart No. 1 in that report, WVHC stated, contains 
flow data for each of the 112 bond forfeiture sites, but does not total 
the flow of those sites. The total flow of 6,251 gallons per minute 
(gpm) can be calculated by simply adding the flows of the individual 
sites listed in Chart No. 1, WVHC stated.
    WVHC stated that in contrast to the 1998 data, two other WVDEP and 
OSM calculations show much higher flows. WVHC asserted that as a 
result, WVDEP's total annual cost of water treatment at these sites is 
greatly underestimated.
    WOPEC addressed WVHC's claim that treatment costs were seriously 
understated by underestimating flow. WOPEC acknowledged that, ``As 
illustrated in the July 2, 2002 update, there were problems with flow 
and quality, but these problems overstated estimated costs rather than 
understating these costs.'' WOPEC emphasized that any program as 
complex as estimating treatment liabilities will encounter details that 
have to be added, eliminated, or modified as the program is implemented 
and associated problems are identified.
    The WVHC comment inappropriately compares flow data from active 
mines on the 1998 AMD inventory with flow data from 112 bond forfeiture 
sites. However, the commenter has accurately identified an initial 
difference of 2,501 gallons per minute between WVDEP's and our 
representation of total flow rates for bond forfeiture sites. We are 
continuing to work with WVDEP on the inventory of bond forfeiture sites 
with AMD. Further evaluations identified errors in the inventories 
resulting in flow rate adjustments by both agencies.
    We have always recognized that program liability costs, derived 
from the inventory data, are at best a gross estimate that may either 
underestimate or overestimate the actual program liability cost. There 
are a number of factors influencing the ``absolute'' accuracy of these 
cost projections, primarily the costing methodology and water quality 
data limitations (insufficient samples to characterize the discharge, 
lack of seasonal variation data, adequacy of sampling protocol and 
accuracy of flow measurements, etc.). Consequently, we may not know the 
exact costs until treatment systems have been installed at each site 
and actual construction and operating cost data are collected and 
analyzed. WVDEP's revised ABS includes provisions for adjustment in the 
event reclamation costs are either underestimated or overestimated. The 
State's ABS now includes an Advisory Council that is charged with 
ensuring the effective, efficient, and long-term financial stability of 
the special reclamation program and requires an actuarial review every 
four years.

[[Page 37618]]

d. Current WVDEP Chemical Treatment Costs
    WVHC stated that WVDEP underestimated its own chemical treatment 
costs at five sites where WVDEP is responsible for chemical treatment 
by about $1 million. WVHC stated that WVDEP listed its total cost for 
five sites (DLM, F&M, Omega, Royal Scot, and T&T Fuels) as $1,540,000. 
The individual cost figures for each site differ greatly from WVDEP's 
other recent cost estimates for the same sites. For example, WVHC noted 
that the June 2000 WVDEP Fund balance sheet showed a total of $2.47 
million, and August 8, 2000, WVDEP Fund Water Quality Efforts and Plans 
showed a total of $2.65 million for these five sites. Since annual 
operating costs are the major factor driving long-term costs, WVHC 
stated, the result is a huge underestimation of liability. WVHC also 
stated that other WVDEP information indicates that the State seriously 
underestimated the assumed water treatment costs for the T&T Fuels 
site.
    WV Coal Association responded by stating that WVHC is incorrect in 
its assertion that the current cost estimates for treating AMD at the 
sites discussed above is $1 million per year less than other recent 
estimates. The lower number, WV Coal Association maintains, does not 
represent an estimate but is WVDEP's actual costs. Further, WV Coal 
Association notes that the F&M site is funded by a private trust with 
$3.8 million in assets.
    We disagree with the comment that WVDEP has underestimated its 
water treatment costs at the five sites referred in the comment. WVDEP 
maintains expense records for all bond forfeiture sites where chemical 
treatment is conducted. WVDEP's most current annual treatment costs for 
those sites are $1,540,000. Although WVDEP included water treatment 
costs for F&M at $200,000, those costs are actually being reimbursed 
through a trust fund administered by a local watershed group and 
consequently, upon reimbursement, do not represent a liability to the 
Fund. The current water treatment costs at the T&T Fuels site are 
$400,000. We believe that some of the costs identified by the commenter 
include both operating and capital construction costs for the bond 
forfeiture sites mentioned above.
e. Water Treatment Costs at Active Permits
    WVHC stated that OSM and WVDEP have underestimated actual treatment 
costs at active mine sites with AMD. WVHC asserted that OSM and WVDEP 
state that actual treatment costs at active mine sites with AMD are no 
more than about $25 million. In contrast, WVHC asserted, WVDEP's own 
consultant has stated:

    Using historic State expenditures as a standard, industry spends 
at least $30 million per year neutralizing acidity in West Virginia. 
Capital-intensive, high-volume plants designed to deal with large 
alkaline flows laden with iron and difficult manganese sites suggest 
the total bill to industry exceeds $60 million.

    WVHC asserted that WVDEP chose to use a simplified model for 
estimating treatment costs at active sites rather than obtaining all 
current actual costs from industry. As a result, WVHC asserted, OSM and 
WVDEP have ignored available or obtainable data and instead used a 
methodology that likely underestimates actual costs. WVHC further 
asserted that to the extent that WVDEP's consultant, WOPEC, used actual 
cost data from some industry sites, WVDEP did not verify that data and 
does not know where it came from or how it was obtained.
    WOPEC responded to these assertions. WOPEC stated that actual cost 
data was used in estimating annual treatment costs and that, based on 
its experience, this data was quite reliable. In its December 17, 2001, 
report, WOPEC stated that in developing a general methodology, WVDEP 
obtained actual treatment costs from numerous coal companies that 
covered 95 individual treatment sites. This was then supplemented with 
actual costs from 22 treatment sites currently operated by the WVDEP. 
The costs for these sites were then used to determine the annual cost 
per ton of loading for acidity, iron, and manganese. WOPEC also noted 
that, as seen in the December 17, 2001, report, actual costs were 
utilized in projecting annual estimated treatment costs. WOPEC stated 
that OSM did not utilize loading and actual operator treatment costs to 
produce its annual estimated costs, but instead utilized a modified 
version of the Tetra Tech methodology, which produced nearly the same 
estimated annual treatment costs as the WVDEP estimate.
    WVDEP and OSM independently conducted treatment cost calculations 
for active mines and arrived at cost estimates of $25,600,000 and 
$24,990,761, respectively. Although we relied on a computer program to 
run estimated costs, WVDEP hired a consultant, WOPEC, to assist in 
developing its estimated annual treatment costs. The consultant used 
actual treatment costs supplied by the coal industry, as well other 
State treatment costs to develop a method to calculate costs. These 
costing methodologies are explained in Appendix I of the Report. Both 
models are conservative. That is, both models probably provide higher 
projected cost estimates than necessary, because sites are included in 
the inventory that will not actually require long-term water treatment 
after land reclamation is completed. Also, the estimates include a 
significant cost component for pumped discharges that are associated 
with active mines that are likely to have smaller discharges after 
mining. Both WVDEP's and our costs were limited to annual treatment and 
did not include capital construction costs. It is not clear, however, 
whether the $30--$60 million cost range that WVHC referred to is 
adequately supported by data, and it is not clear whether these costs 
are for treatment only or are intended to include both capital 
construction and operating costs. Therefore, we find that there is 
insufficient justification for use of WVHC's $30--$60 million estimate 
in place of the cost estimates that both we and WVDEP developed.
f. Costs of Treating to Effluent Standards
    WVHC asserted that WVDEP understated water treatment costs by 
including costs at sites that are violating required effluent 
standards. WVHC stated that WVDEP's analysis is based on the assumption 
that existing sites that are treating AMD are complying with required 
effluent standards under the Clean Water Act. WVHC stated that, in an 
October 2001, slide presentation produced by OSM in response to the 
WVHC's document requests in the pending citizen suit, OSM stated that 
it downloaded records of effluent violations at bond forfeiture sites 
from WVDEP's Environmental Resources Information System (ERIS) 
database. From these records, WVHC stated, OSM determined that 46 sites 
were producing AMD that was causing violations of effluent limits under 
the Clean Water Act. WVHC stated that those permits with violations 
include T&T Fuels and Royal Scot Minerals, which are two of the sites 
where WVDEP is responsible for chemical treatment. Yet, WVHC asserted, 
WVDEP has based its treatment costs at those sites on existing 
treatment levels, not on the costs needed to comply with required 
effluent limits. WVHC stated that WVDEP's proposal is therefore 
inadequate because it fails to take account of the cost of treating 
acid mine drainage to Clean Water Act effluent standards.
    In response, we acknowledge that treatment costs may go up for any 
sites not meeting Clean Water Act standards. We have not completed 
detailed analyses of the sites to determine if

[[Page 37619]]

these exceptions are caused by site or technological limitations that 
would have a significant bearing on costs. Again, we were only doing a 
model analysis to obtain gross cost estimates for the entire universe 
of pollutional discharges at bond forfeiture sites. The State will 
continue to refine these data, to fully account for the costs of 
treating AMD to Clean Water Act effluent standards.
g. Passive Water Treatment Costs
    WVHC stated that WVDEP improperly limited treatment costs to the 
costs of passive treatment. WVHC stated that to be effective on a long-
term and permanent basis, treatment costs must consider the cost of 
constructing treatment facilities and using chemical treatment for such 
discharges.
    WOPEC responded to WVHC's assertion that treatment costs were 
limited to the costs of passive treatment systems by stating that the 
assertion was absolutely false and that:

absolutely no passive treatment methods or costs [were] used 
whatsoever in my projection of estimated annual treatment costs for 
the Active Permits or the Bond Forfeiture permits. All cost data was 
derived from active type treatment systems utilizing some form of 
chemical treatment.

    We have no evidence that would lead us to conclude that WVDEP 
limited its treatment costs to the costs of passive treatment systems. 
However, passive systems may be used if sufficient funds are provided 
for their continued maintenance and replacement as long as treatment is 
necessary on bond forfeiture sites.
h. Removal of Sites From AMD Inventory
    WVHC stated that OSM and WVDEP improperly deleted active sites from 
its AMD inventory.
    We disagree. The commenter provides no basis for this allegation. 
We only deleted a site from the active inventory if it was found to 
have no pollutional discharges, or it was moved to the bond forfeiture 
inventory if the permit was revoked. The OSM/WVDEP inventory effort 
began by including all permanent program bond forfeiture permits listed 
in the WVDEP Bond Forfeiture Permits Database that were shown to have 
``yes'' in the AMD field of that database. That review identified 219 
permits with AMD from a total of 1,695 bond forfeited permanent 
program, interim program and pre-law coal mining permits. After several 
months of discussions and permit file and field reviews, WVDEP and OSM 
agreed to a revised listing of permits to be included on the AMD 
inventory. Questionable sites were retained on the inventory. This was 
to ensure that such sites would not be eliminated from the inventory if 
they could eventually become a future AMD liability to the Fund. The 
water quality consideration used to determine retention on the 
inventory was based on the required effluent limitation standards for 
the site when it was active. This inventory effort actually increased 
the total number of permits from the listing that WVDEP had previously 
identified as bond forfeiture sites requiring treatment.
    WVDEP has since prioritized the inventory and designated many of 
the questionable permits as insignificant discharges not requiring 
treatment. We entered into a work plan agreement with WVDEP to 
evaluate, during 2002, all those permits (26) to determine if WVDEP's 
designation is correct and whether or not the permits should be 
retained on the inventory. The 2002 work plan also includes an analysis 
of the remaining permanent program permits included in the bond 
forfeiture permits database (1,695 permits) that show a ``No'' or were 
left blank in the AMD field of the database. We believe that our 
overall approach in developing the inventory is very reasonable and 
complete, and we did not eliminate permits from the inventory with 
disregard for future liability as portrayed by the commenter.
    WVHC stated that in October 2001, OSM and WVDEP signed a ``Detailed 
Oversight Evaluation Work Plan'' for Evaluation Year 2001, which 
states:

    While developing OSM's Regional AMD Inventory with WVDEP, 112 
sites were removed from WVDEP's 1998 Active Mine Drainage Inventory 
due to insufficient water quantity or quality information.

Thus, WVHC stated, OSM and WVDEP failed to analyze these 112 sites and 
assumed that they pose no risk of future AMD liability. A more 
realistic assumption, WVHC stated, is that these sites will produce AMD 
and become a Fund liability at the same historical rate as other sites.
    In response, we note that the 112 sites or records (80 permits) 
that were removed from the 1998 Active Mine Drainage Inventory were 
removed only after appropriate consideration. Nine of the 80 permits 
had been revoked and are now the responsibility of the Special 
Reclamation Program. Forty-nine permits had received a Federal 
inspection with no indication of water quality problems. The violation 
history for each of the remaining 22 permits was checked to determine 
whether effluent limitation violations had ever been issued. Seven 
permits were identified as having past effluent limitation violations. 
Those seven permits are part of our oversight for 2002 and will be 
evaluated in the field this year.
    WVHC stated that the ``Detailed Oversight Evaluation Work Plan'' 
for Evaluation Year 2001 also states:

    Of the 918 permanent program permits that had been forfeited 
when this effort started, OSM and WVDEP focused on 219 permits where 
the WVDEP had recorded in its ``permits'' database that at one time 
produced AMD. OSM and WVDEP reached consensus that 148 of the 219 
permits should continue to appear on an AMD inventory. For the 
remaining 699 permanent program permits, OSM proposes to conduct a 
spot check to achieve a level of confidence that none of the 699 
permits generate AMD.

Thus, WVHC stated, OSM and WVDEP excluded these permits from its 
analysis and assumed that these permits would not become a future 
liability to the Fund. WVHC stated that according to a draft OSM 
memorandum, WVDEP also refused to assist OSM in validating or refining 
the AMD bond forfeiture inventory for any permit where the Special 
Reclamation Program database showed that land reclamation had been 
completed.
    We disagree with the commenter's assertion that we improperly 
assumed that none of these permits would produce AMD and become a Fund 
liability and, therefore, should have included them in the analysis. We 
found in our analysis of the WVDEP Bond Forfeiture Permit and Water 
Quality databases that WVDEP has been conducting an aggressive water 
sampling program at bond forfeiture sites since 1990. Despite 
statements in the draft OSM memorandum, the State has recently been 
working with OSM on gathering data for any bond forfeiture site with a 
pollutional discharge. The WVDEP has devoted an exceptional amount of 
time and effort to sampling water at permits with bond forfeiture 
(including interim permits). The extensive water quality work that 
WVDEP has performed at these sites provided us confidence that the 
WVDEP had accurately identified the majority, if not all, permanent 
program bond forfeiture permits with AMD. However, due to our oversight 
responsibilities, we propose to spot check the remaining 699 permits. 
Given our experience to date, we do not anticipate finding any 
discrepancies during this review that would alter WVDEP's original 
analysis.
    WVHC also stated that the Oversight Plan also states:

    During the cooperative development of the Bond Forfeiture AMD 
Inventory in 2000/2001, WVDEP identified 54 permits where

[[Page 37620]]

the reclamation liability analysis, including water quality, had not 
been completed, but AMD was a concern. The WVDEP agreed that all 54 
sites should be included on the Bond Forfeiture AMD Inventory and 
site-specific information be collected by WVDEP and provided for the 
Inventory. That information was not available for 11 of the 54 
permits at the end of the Inventory effort.

WVHC stated that OSM and WVDEP excluded those 11 permits from the 
analysis because of the optimistic assumption that they would not 
become a liability to the Fund. According to the commenter, a more 
realistic assumption is that these sites will become liabilities to the 
Fund at the same historical rate as other sites.
    The 11 permits were not excluded from the cost calculations. A 
default cost was initially used pending updated water quality 
information from WVDEP, which will allow for the estimation of site-
specific water treatment costs.
i. OSM's Consultant's (Tetra Tech) Analysis
    WVHC stated that, in its August 24, 2000 ``Final Report on the 
Contingency Costs of Long-Term Treatment of Mine Drainage,'' OSM's 
consultant, Tetra Tech, calculated that the long-term costs of 
treatment of AMD at forfeited mine sites in West Virginia would be 
$2,643,099,976 after fifty years. In contrast, WVHC stated, WVDEP 
calculates that its annual liability for AMD treatment will be less 
than $10 million per year after twenty years. After fifty years, the 
cumulative liability based on this annual rate would be less than 
$500,000,000. WVHC stated that this is less than one-fifth of the Tetra 
Tech figure. WVHC asserted that WVDEP and OSM have failed to reconcile 
WVDEP's analysis with Tetra Tech's analysis.
    WOPEC responded to the comment that WVDEP and OSM have failed to 
reconcile WVDEP's analysis with Tetra Tech's analysis by pointing out 
that Tetra Tech relied upon the methodology used to estimate treatment 
costs for Superfund sites. According to the commenter, that methodology 
does not translate well to treatment of pollutional discharges from 
coal mines.
    We disagree with the commenter's assertion that we failed to 
reconcile WVDEP's analysis with Tetra Tech's analysis. There is nothing 
to reconcile, because the Tetra Tech analysis was not intended to 
produce a valid cost for water treatment. In its August 4, 2000, 
``Final Report on the Contingency Cost of Long-Term Treatment of Mine 
Drainage,'' Tetra Tech states that its calculations were ``illustrative 
of the use of a methodology,'' but cautioned that ``they did not 
reflect final determinations of unfunded costs.'' In other words, Tetra 
Tech was demonstrating how to use its methodology, but it was using 
hypothetical data to do so. The Tetra Tech report advises OSM not to 
use the examples contained within the report as cost projections for 
AMD treatment. The Tetra Tech report in question was done prior to the 
completion of the OSM inventory that shows that costs for all active 
sites do not exceed $25 million per year, and only a portion of those 
sites are likely to be forfeited in the future. The report used 
examples of treatment costs that do not reflect current estimates.

4. Future Land Reclamation Costs

a. Actual Land Reclamation Cost Estimate
    WVHC stated that OSM and WVDEP grossly underestimated West 
Virginia's unfunded liabilities for land reclamation at bond forfeiture 
sites. WVHC stated that WVDEP's estimated $27.9 million liability for 
land reclamation works out to only $2,558 per acre, based on 304 
permits that contain 10,902 disturbed acres. WVHC stated that WVDEP's 
current land reclamation costs are $5,400 per acre for poor 
reclamation. The commenter stated that WVDEP's reclamation costs on 
forfeiture sites were $2,820 per acre in 1994--the lowest per acre cost 
in the history of the program, and in the twelve months ending June 30, 
1995 were $4,214 per acre statewide.
    In contrast, the WV Coal Association stated that several of the 
land reclamation estimates appear excessive. On some sites, the WV Coal 
Association asserted, land reclamation has been completed with final 
regrading and revegetation work in place. WV Coal Association also 
stated that we failed to account for the sites where remining 
operations will eliminate environmental liabilities altogether, and at 
no cost to the Fund. WV Coal Association pointed out that a recent 
rulemaking by the U.S. Environmental Protection Agency extends 
incentives to remine sites to operations extracting coal from sites 
forfeited since 1977. WV Coal Association stated that many of the 
permits listed on the Fund inventory were revoked and bond forfeited 
for minor infractions such as failure to renew or failure to maintain 
proper insurance. The commenter also stated that most recent WVDEP 
reclamation costs are from large sites and, therefore, are not 
representative of all sites.
    We believe that, at the time of our analysis, the estimated land 
reclamation liabilities listed in the analysis represented the best 
estimate available of the expenditure necessary to complete reclamation 
of those sites. We recognize that the source of that information is not 
without deficiencies. However, because it is the best information 
available, we have used it in evaluating the entire system. Individual 
discrepancies would not alter the findings that we made concerning the 
State's amendment. The Advisory Council will consider the reliability 
of that data in developing its recommendations.
    The existing land reclamation liabilities of the Fund are estimated 
to be $27.9 million. At the time of our analysis, Fund data indicate 
that $13.5 million dollars had already been spent at 83 of the 304 
sites. Although we cannot state exactly what has been expended, we know 
that the total amount that the Fund has or expects to expend on these 
sites is approximately $41.4 million. If that were applied to the 
disturbed acres, the per acre figure becomes approximately $3,800 
($27.9 million + $13.5 million divided by 10,901 acres) rather than 
$2,558.
    Not all of the 10,901 acres listed as disturbed acres require 
backfilling and grading, which is the most expensive component of land 
reclamation. In fact, we are aware that in some cases the disturbed 
acreage figure is a carryover from the inspection and enforcement 
estimate of the portion of the permit that had been disturbed without 
reduction for any reclamation completed by the operator. The WVDEP does 
not necessarily revise the disturbed acreage data until it is ready to 
contract the site for reclamation and have an accurate measurement. 
Therefore, dividing the total liability amount by the disturbed acreage 
figure does not provide an accurate cost per acre cost estimate.
    All of these projections are estimates. The revised ABS includes 
periodic review by the multi-interest Advisory Council, which will have 
the benefit of determinations provided by a professional actuary, to 
evaluate the need for future adjustments to the Fund. The WVDEP has 
spent considerable effort to redesign the data management system that 
it is using for the Fund and that effort should result in a system that 
will provide accurate, conclusive information that can be used for 
analysis and management decisions.
    WV Coal Association stated that recently implemented changes to 
West Virginia's mining program will reduce the liability associated 
with a bond forfeiture site. For example, new regulations associated 
with excess spoil minimization, approximate original

[[Page 37621]]

contour (AOC) restoration, and contemporaneous reclamation will reduce 
the amount of disturbance. In addition, WV Coal Association stated, a 
properly maintained inspection and enforcement program should not only 
reduce the liability of a given site, but should prevent bond 
forfeiture totally. WV Coal Association asserted that, at any given 
time during the life of the mining operation, only one-third of the 
permit should be disturbed, thus effectively increasing the amount of 
bond available in the event of forfeiture by three times the original 
amount.
    In response, we agree with WV Coal Association's comment that a 
properly implemented inspection and enforcement program and close 
adherence with the State's excess spoil, AOC, and contemporaneous 
reclamation rules should reduce the amount of unreclaimed disturbed 
area and, therefore, the potential reclamation costs in the event of 
bond forfeiture (although it will not prevent bond forfeiture, contrary 
to the commenter's allegations). However, the WV Coal Association 
failed to mention that only mountaintop removal mining operations are 
subject to the requirement that only one-third of the permit area be 
disturbed at any given time. Furthermore, there are other provisions 
within the State's rules that, under certain circumstances, would allow 
for the approval of larger disturbances involving mountaintop removal 
and multiple seam mining operations. Therefore, while relevant, we do 
not believe that these observations warrant special consideration in 
the analysis of the West Virginia ABS.
    If reclamation costs are lower, the Advisory Council has the 
authority to recommend appropriate Fund adjustments to the Legislature 
and the Governor. We agree that the ideal program that all States 
should strive to achieve would be one that prevents the occurrence of 
bond forfeitures. Unfortunately, we do not believe that the total 
elimination of future bond forfeitures is a realistic expectation, and 
we must plan accordingly.
    WV Coal Association stated that several of the permits listed in 
the forfeiture inventory also appear to qualify for AML funds and 
should be removed from the Fund inventory.
    We do not believe that there are any AML eligible sites requiring 
reclamation under the Fund. However, if there are any, WVDEP should 
identify those sites and, based on its approved program, determine if 
they should be removed from the inventory.
b. Cost of Reclamation at Four Sites
    WVHC stated that WVDEP's reclamation costs at three sites ($2.3 
million at the Omega site, an additional $2.9 million at the T&T site, 
and $25 million at the Royal Scot site) exceed the WVDEP's $27.9 
million estimate for all land reclamation. These three sites combined, 
therefore, exceed $27.9 million by themselves, without considering any 
of the other 110 bond forfeiture sites on the list.
    WVHC further stated that a State official testified that this has 
not fixed the problems at the Royal Scot site. Fixing the problems at 
Royal Scot would cost either (1) $25 million in one-time capital costs 
for a complete fix; or (2) $6.5 million in capital costs for land 
reclamation and $30,000 to $40,000 per month in perpetual operating 
costs for water treatment. This translates to $360,000 to $480,000 per 
year, much higher than the $250,000 WVDEP assumed. Furthermore, the $25 
million in capital costs for this one site alone approaches the total 
estimated costs for all existing bond forfeiture sites in the state, 
which WVDEP estimated at $27.89 million. In the WVDEP's spreadsheet, 
the total land reclamation liability for all Royal Scot sites amounts 
to only $6,222,631.
    Additionally, WVHC stated, WVDEP has estimated that the cost of 
land reclamation for a small mountaintop removal mine that recently 
forfeited its bond (Quintain) will be more than $15,000.00 per acre. 
Because the Quintain mine was permitted before the requirements of the 
Bragg consent decree went into effect, the $15,000 per acre reclamation 
costs are significantly lower for that mine than such costs will be 
post-Bragg. WVHC stated that WVDEP's land reclamation estimate is 
therefore far too low, even before the more expensive reclamation 
requirements resulting from Bragg are included in the cost 
calculations.
    The liability figures discussed in this comment point out the 
difficulties encountered when parties try to quantify the liabilities 
of the Fund. The $2.3 million reclamation liability for the Omega site 
and the $2.9 million for the T&T site noted in the comment are not the 
remaining land reclamation liabilities. All land reclamation at the 
Omega site has been completed. The land reclamation liability for the 
T&T site is $105,000 and $6.2 million for the Royal Scot sites.
    WV Coal Association noted what it believes are discrepancies 
between WVHC statements on cost estimates and those of a State 
official's testimony.
    We believe that these differences of opinion serve to emphasize the 
importance of WVDEP's current efforts to improve the quantity and 
quality of its Fund inventory data. The Quintain forfeiture site was 
included in the inventory. However, our cost projections did not 
include a special analysis of mountaintop removal mining permit 
failures. Nor have we conducted a study of the effects of the 
permitting requirements related to the consent decree resulting from 
the Bragg litigation on the expected costs to complete reclamation in 
the event of bond forfeiture. While it is logical that the reclamation 
costs to an operator of a mine operating under those criteria would be 
increased, the cost to the Fund to complete reclamation of such a site 
in the event of bond forfeiture might not be as significantly impacted 
due to constraints such as limits on extent of disturbed area and spoil 
placement. Furthermore, the post-Bragg standards would only apply to 
those mine sites that were permitted under the new requirements or 
modified and forfeited after they went into effect. As we stated above, 
we believe that West Virginia has put in place an ABS, including 
increased special reclamation tax rates, the Advisory Council, and the 
recurring actuarial determinations, that will provide the State with 
the means to fully evaluate and manage the Fund, its current 
reclamation obligations, and estimates of future bond forfeiture rates 
and reclamation cost obligations, so that the State can fully meet 
those demands.
c. $3.9 Million Land Reclamation Cost Estimate
    WVHC stated that the ``Last 3 Yr. Average net land liability'' 
figure of $3.9 million was based on the difference between the bond 
amounts for forfeited sites during the last three years (1998-2000), 
and the estimated land reclamation liability for those sites. This 
figure represents the liability for future land reclamation at active 
sites that forfeit their bonds in the future. In calculating this 
figure, WVHC stated, the State official ``didn't project any cost for 
active permits for land reclamation,'' and ``didn't consider [the 
possible] bankruptcy of any company.'' Morgan Consultants also provides 
a detailed review of specific companies as further indications of the 
risk of failure.
    Morgan Consultants stated that WVDEP has provided no analysis or 
justification for the use of the $3.9 million value. Morgan Consultants 
stated that nowhere in the supporting data or in the OSM review is 
there any calculation of the liability associated with the existing 
permits in West

[[Page 37622]]

Virginia. Therefore, WVDEP can make no informed representation of the 
current reclamation liability.
    Morgan Consultants stated that the use of the $3.9 million value 
for annual reclamation costs is totally inadequate and not supported by 
WVDEP's own data ``as the current reclamation liability for land 
reclamation consists of about $27.9 million.'' According to the 
commenter, ``the accrual of such a significant historic liability is 
clear evidence that WVDEP does not initiate reclamation efforts to 
reclaim the site in accordance with the reclamation plan within the 
required 180 day period.'' The commenter also claimed that the 
inadequacy of the $3.9 million estimate is further evidenced by 
comparison to WVDEP's own estimate of the liability associated with the 
reclamation of the 46 permits revoked in 2000. WVDEP estimated 
reclamation costs for those sites at $6.21 million.
    We agree that WVDEP did not provide a detailed analysis in support 
of the estimated $3.9 million shortfall for land reclamation. WVDEP 
advised that it arrived at this amount by using the estimated liability 
for bond forfeiture sites during calendar years 1998, 1999, and 2000, 
that were on the listing of land liability sites and adding 10 percent 
for inflation. We found this estimate to be reasonable based on an 
earlier OSM/WVDEP study. The June 1999 joint OSM/WVDEP Phase II Report 
of the West Virginia ABS had a similar table for a five-year period 
coinciding with State fiscal years beginning in July 1992. The 
shortfalls for those years were $4.7 million, $6.6 million, $6.1 
million, $2.3 million and $1.7 million with an average shortfall of 
$4.3 million. Therefore, we believe the State's estimated $3.9 million 
shortfall is reasonable because it doesn't vary significantly from our 
estimate of $4.3 million.
    The ``Last 3 Yr. Average net land liability'' is the difference 
between the amount of the bond and the accrued liability for the 
permits revoked during a one-year period based on an average of the 
last three years. Such a projection uses historical data for both the 
forfeiture rate that would add bond forfeiture revenues to the Fund and 
for the liability or amount of money that must be expended from the 
Fund to complete the reclamation of the sites. The difference between 
these is the revenue shortfall that must come from a source other than 
the forfeited bonds. The cost of reclaiming active mines and 
bankruptcies are all considered based on the historical record of bond 
forfeiture rates and reclamation costs. We believe that the historical 
bond forfeiture rate on an annual basis is a good reference for 
projecting future forfeiture rates and, consequently, liabilities.
d. Historical Costs Used for Estimates
    Morgan Consultants stated that the information provided by the 
WVDEP does not provide any data of permit defaults and bond forfeiture 
data by year for the last ten years, even though this information is 
critical for the definition of the historic trends.
    We agree that WVDEP did not provide the data suggested by the 
commenter. However, State data show that the following number of bonds 
were forfeited from 1996 through 2001: 1996--52, 1997--35, 1998--31, 
1999--26, 2000-61, and 2001--38. The Phase II Report mentioned above 
also has a summary showing the number of bond forfeitures that covered 
the five-year period from July 1992 through June 1997. The number of 
bonds forfeited during those State fiscal years were: 1992 to 1993 = 
94; 1993 to 1994 = 94; 1994 to 1995 = 122; 1995-1996 = 60; and 1996 to 
1997 = 53. Although the exact data mentioned is not available, there is 
historical data available with regard to the number of sites and 
revenues needed.
    Morgan Consultants stated that review of data supporting the WVDEP 
ABS does not indicate any analysis of the average disturbed area per 
permit for those permits placed in bond forfeiture per year for each of 
the last 10 years. WVHC stated that WVDEP does not provide any analysis 
of size of the current permits. Without these data, WVHC asserts, there 
is no means to evaluate the applicability of the historic reclamation 
costs to define the future liability. WVHC stated that WVDEP did not 
include any analysis of the permit area when developing its proposal.
    We have found that the WVDEP did not have the data checks in place 
to ensure consistency of data entry and therefore we have not attempted 
to make projections using certain data fields such as the disturbed 
area. In some cases, the disturbed area is from inspection and 
enforcement data showing the portion of the permit area that has been 
disturbed without any reductions for reclaimed areas. Generally, after 
a contract has been let for reclamation work, the disturbed area is 
revised to reflect the actual disturbed area to be reclaimed under the 
contract. We determined that from 1993 through 2000 the average acreage 
for revoked permits ranged from 22 acres in evaluation year 1998 to 103 
acres in evaluation year 1999. Currently, the average number of acres 
per permit is 119 acres, as reported in Table 2 of the 2001 West 
Virginia Annual Evaluation Report.
e. Reclamation Costs at Large Mountaintop Removal Mines
    Morgan Consultants stated that the bond forfeiture data, relied 
upon by WVDEP to calculate their $3.9 million per annum land 
reclamation liability, does not include many large sites, as the 
average disturbed acreage of current permits in bond forfeiture is 35.8 
acres. However, one recently forfeited (January 2000) permit the 
Quintain operation (Permit  S-5033-96), has a disturbed 
acreage of 255 acres and a reclamation cost of $15,439 per acre, as 
estimated by WVDEP. The total estimated reclamation cost of $3.94 
million for that permit alone exceeds the proposed annual land 
reclamation of $3.9 million.
    We previously explained the origin of the $3.9 million per year 
revenue shortfall estimate. Also, the year 2000 was significantly 
higher both in the number of sites and the amount of reclamation 
liability that the Fund was obliged to assume. Previous time periods 
have also had spikes, but when averaged over multiple tear periods, the 
forfeiture rate has been relatively constant. The Advisory Council is 
charged with reviewing the financial soundness of the Fund on a routine 
basis and this process can provide for adjustments as needed to ensure 
the continued fiscal soundness of the Fund.
    WVHC stated that WVDEP failed to calculate the cost of reclaiming a 
large mountaintop removal mine if the operator forfeited at the time 
when reclamation costs are at their greatest. WVHC stated that WVDEP 
has failed to consider the amount of disturbed acreage for past 
forfeited permits, or the increasing size of disturbed areas for 
current permits. WVHC asserted that, therefore, WVDEP has no basis for 
extrapolating from historic to future costs of land reclamation, and 
has likely understated the costs. Morgan Consultants stated that an 
indication of the inapplicability of the reclamation costs from 
historic sites in predicting future costs is the difference in size of 
the current forfeited permits when compared to the historic sites. 
Morgan Consultants stated that the average disturbed acreage for all 
current forfeited permits is only 35.8 acres. This is dramatically less 
than the potential disturbed area on a large surface mine such as 
Spruce or Alex Energy.
    WV Coal Association stated that, because Spruce and Alex Energy are 
exceptionally large, Morgan is incorrect in his assumption that Spruce 
and Alex Energy are indicative of the majority of

[[Page 37623]]

permits sought by mining companies and approved by WVDEP. Also, WV Coal 
Association stated, because of a 250-acre threshold on proposed mining 
sites, implemented by the U.S. Army Corps of Engineers as a result of a 
settlement agreement, most proposed permits are designed to fall within 
the 250-acre threshold, thereby limiting the size of the mining 
project.
    We believe that historic data for forfeitures and reclamation costs 
is the best and most reliable information available for projecting 
future forfeitures and reclamation costs. Because the ABS statutory 
provisions require the Advisory Council to continue monitoring 
forfeiture and reclamation cost data, changes can be made in the ABS as 
necessary to respond to changing conditions. We believe that this 
feature will allow the ABS to adapt to changes in a more timely manner 
and consequently is a better method for managing a dynamic program, 
such as the Special Reclamation Program.
    Morgan Consultants stated that any review of reclamation liability 
associated with the permit size should separate the surface mine 
operations from the analysis of underground mines or mine support 
facilities as the liabilities have totally different characteristics. 
WVHC stated that WVDEP's analysis did not evaluate the different mining 
types separately.
    We have not categorized permits by size or type. Instead, we looked 
at the ABS as one system and based our evaluation on the whole unit not 
the component parts. If the State's site-specific bonding rates were 
being changed, then we would agree that the different types and sizes 
of operations should be segregated and considered separately. However, 
we do not believe that this separation is necessary at this time.
    WVHC stated that if Arch, Massey, or AEI were to fail, the cost of 
reclaiming its sites would be tens or hundreds of millions of dollars. 
WVHC stated that Morgan Consultants estimates that the failure of a 
moderately large surface mine (4 million tons per year) at an 
inopportune time would cost 30 million dollars to reclaim just to 
achieve rough regrade. A huge mine like the proposed Spruce Mine with a 
large contemporaneous reclamation variance would cost much more.
    We agree that the land reclamation cost associated with the 
reclamation of a large mountaintop mine is not reflected by previous 
forfeitures. We believe that to manage these costs WVDEP must continue 
to vigorously enforce its contemporaneous reclamation requirements and 
continue to require site-specific bonds up to the $5,000 per acre limit 
to ensure reclamation. The increased bond amounts will help lessen the 
exposure of the Fund in the event of such a bond forfeiture. We agree 
that a risk analysis should be done to consider the potential impact 
that the failure of large mining operations would have on the State's 
ABS. These are some of the risk factors that the Advisory Council will 
have to consider when making recommendations to the Legislature and the 
Governor concerning the fiscal soundness of the Fund.
f. Potential Failure of Large Mining Companies
    WVHC stated that WVDEP did not consider the potential failure of a 
large mining company like Arch Coal, Massey Energy, or AEI Resources. 
Such a failure is possible if bonding companies go bankrupt, coal 
prices decline, coal mined outside of Appalachia becomes less expensive 
in the market served by coal from Appalachia, or coal use declines as a 
result of environmental regulations. In its February 2001 draft report 
to WVDEP, ``The Mountain State Clean Water Trust Fund,'' WVDEP's 
economic consultants at Marshall University stated that ``it is 
possible over the next 25 years some firms in the Fund may fail.'' Fund 
Report, p. 7, Ex. 24. ``This occurrence directly transfers the cost of 
water treatment from the private to the public sector.'' This report 
recognized that ``the coal industry faces enormous risks,'' and 
therefore an insurance fund ``is needed as a protection for the State's 
taxpayers.''
    Morgan Consultants stated that the consolidation of the mining 
industry would result in the default of a significant number of permits 
and a significantly higher liability than the failure of one company 
with one permit. Morgan Consultants stated that neither WVDEP or OSM 
has provided any data to define the consolidation of the industry, nor 
have they reflected such consolidation in the determination of 
potential default rates.
    WVHC stated that by looking only at reclamation costs from past 
bond forfeitures, WVDEP has not calculated its potential liability from 
the failure of one of these large companies, since none of the 
companies that have failed in the past twenty years approaches the size 
of these companies. Consolidation in the mining industry makes such 
catastrophic failures far more likely than in the past.
    We agree that these comments identify a potential problem, but they 
do not offer any suggestions for how it should be addressed. The ABS 
did see a spike of forfeited bonds during 2000 when the Royal Scot 
permits were revoked. Likewise, the annual revenue shortfall also 
reflects that spike for the year. The number of bond forfeiture sites 
has been on a downward trend, but deviations should be expected. As the 
coal industry has consolidated and only the larger, better capitalized 
companies have survived, fewer permits are being revoked. However, as 
the number of mining companies has decreased, we recognize that the 
failure of a larger company could have a significant impact on the 
Fund.
    At the current time, past cost is the best information available 
for the evaluation and projection of bond forfeitures and the cost to 
complete reclamation. Although the failure of a large mining company 
could be a very significant event, we do not believe that the failure 
of such a company would necessarily result in the forfeiture of all 
permits held by that company. Many could be assumed by another 
operator, especially if the permitting enhancements currently underway 
have improved the accuracy of the hydrologic assessments and 
reclamation plans so that the likelihood of a long-term liability due 
to AMD is greatly reduced or eliminated. We also believe that the 
probability of such a failure is significantly less for the larger 
operations that plan to remain in the coal business for years to come 
than it is for smaller undercapitalized companies that have typically 
appeared on the bond forfeiture list. Further, as mentioned above, 
these are the potential risks that the Advisory Council will need to 
study. We believe that the Advisory Council, together with the actuary, 
will be able to respond as the need arises and recommend the 
adjustments necessary to keep the ABS on a sound financial basis. The 
Advisory Council is also tasked to study the development of alternative 
financial processes that ensure the long-term stability of the Fund. 
This study would include an analysis of the risks mentioned above, and 
may require adjustments in the funding mechanisms to ensure that such 
risks do not jeopardize the stability of the Fund.
g. Reclamation Costs at Mines With New Commercial Forestry PMLU
    WVHC stated that WVDEP considered neither the cost of reclaiming 
sites to the standards required by the State's new Commercial Forestry 
and Forestry regulations nor the cost of deleting grasslands and fish 
and wildlife habitat from the list of uses approved for AOC variance 
mines. WVHC asserted that the new Commercial Forestry and Forestry

[[Page 37624]]

regulations will significantly increase the cost of reclamation after 
2000. Therefore, WVHC asserted, WVDEP's plan fails to contain 
sufficient funds to accomplish post-2000 postmining land uses and 
reclamation costs.
    Morgan Consultants stated that there are additional costs 
associated with the selective excavation, transport, and placement of 
soil replacement material. This could cause the cost per acre to 
significantly exceed WVDEP's estimate of $2558 per acre for land 
reclamation.
    WV Coal Association stated that not every operating or proposed 
permit that could default has a postmining land use of commercial 
forestry. Therefore, these costs won't apply to all permits.
    In response, we note that the impact of the commercial forestry 
rules has not been quantified for reclamation purposes in the event of 
bond forfeiture. Many factors impact reclamation costs including how 
much area has been allowed to be disturbed and unreclaimed, how much 
overburden must actually be moved and how far, and regrading and 
establishing an acceptable vegetative cover compatible with achieving 
the approved postmining land use. We believe that with the increased 
bond amounts and the mechanism for future adjustments in revenues, a 
positive balance in the Fund can be attained and maintained. The site-
specific bonds for these sites, while not adequate to fully cover the 
cost of reclamation, will be significantly greater than previously 
required. Any increased costs will be partially offset by those 
increases. Furthermore, as WV Coal Association alludes, the commercial 
forestry postmining land use is only an option, and then only for 
mountaintop removal mining operations that obtain a variance from AOC. 
Not all mining operations will have to comply with these requirements. 
In addition, the legislation charges the Advisory Council with making 
recommendations to the Legislature and the Governor for any adjustments 
needed to keep the system functioning on a sound financial basis.
h. Reclamation Costs at Mines Required To Meet New AOC+ Policy
    WVHC stated that WVDEP did not consider the costs of complying with 
WVDEP's June 5, 2000, final AOC guidance policy document, the so-called 
``AOC+ Policy.'' For the first time, WVHC asserted, the AOC+ Policy 
requires compliance with SMCRA's AOC requirements and with the Section 
404(b)(1) guidelines promulgated by the U.S. Army Corps of Engineers 
under the Federal Clean Water Act. WVHC stated that compliance with 
these provisions will significantly increase the cost of land 
reclamation for both mountaintop removal and contour mines because of 
the significantly increased spoil handling costs associated with 
minimizing the size of fills. WVHC asserted that WVDEP's plan does not 
even mention these costs, and OSM did not consider these increased 
costs. Morgan Consultants stated that older permits have significantly 
less stringent reclamation requirements than are included in current 
permits.
    In response, we note that the impact of the AOC+ guidelines on bond 
forfeiture reclamation costs has not been quantified. Many factors 
impact reclamation costs, including how much area has been disturbed 
and left unreclaimed and how much overburden must actually be moved. We 
believe that with the increased bond amounts and the mechanism for 
future adjustments in revenues, a positive balance in the Fund can be 
attained and maintained. In addition, the site-specific bonds for these 
sites, while not adequate to fully cover the cost of reclamation, will 
be significantly greater than previously required. Any increased 
reclamation costs will be partially offset by those increases. 
Furthermore, given the reduction in the number and size of excess spoil 
fills due to implementation of the State's AOC+ Policy and better 
contemporaneous reclamation, the cost of reclaiming larger mines may 
actually go down when compared to past mining practices. These are some 
of the factors that the Advisory Council will have to consider when 
making future recommendations regarding the Fund.
i. Costs of Reclaiming to Approved PMLU
    WVHC stated that WVDEP failed to calculate the cost of completing 
the reclamation plan at forfeited sites, as Federal law requires. WVHC 
stated that historically, WVDEP has not required strict adherence to 
the reclamation plan for permits for which bond has been forfeited. As 
a result, WVHC asserted, WVDEP's calculations do not include all 
expenditures ``sufficient to assure completion of the reclamation 
plan'' as section 509(a) of SMCRA requires. Therefore, WVHC asserted, 
WVDEP's cost projections are incorrect because they are based on 
calculations that do not consider the full cost of reclaiming to the 
approved postmining land use. WV Coal Association stated that this 
comment is not consistent with a State official's testimony.
    We agree that the approved State program provides that reclamation 
of bond forfeiture sites must be done in accordance with the approved 
reclamation plan and must provide for any necessary water treatment. In 
our evaluation of some bond forfeiture sites, we found that trees have 
not been planted when woodland was the designated postmining land use. 
In some cases, this may increase the costs of reclamation. However, in 
some other cases, we consider it an administrative process breakdown 
rather than a reclamation deficiency, because permit revision changes 
were made to the reclamation plan in consultation with the landowner, 
but without other public participation. A permittee may revise a permit 
if certain administrative processes are followed and the regulatory 
authority makes the requisite findings. Similarly, the regulatory 
authority may revise the reclamation plan of a revoked permit in 
accordance with proper administrative procedures, including opportunity 
for public involvement when required.
j. Costs of Reclaiming Active Sites Where All Coal Has Been Removed and 
AMD Discharges Remain
    WVHC stated that WVDEP further failed to calculate the cost of 
reclaiming ``active'' mine sites that have not mined coal for many 
years and should be considered to be at a much higher risk of 
forfeiture than those mines where coal extraction (and an income 
stream) is continuing. WVHC stated that WVDEP has underestimated the 
future default rate by ignoring the impact of inactive operations.
    WV Coal Association stated that ``[E]xisting West Virginia 
regulations establish several criteria under which a permit can be 
granted inactive status. While market conditions is one such instance, 
for the commenter to claim that because the price of coal is high and 
three permits have not been reactivated that they are bound for 
forfeiture is assumption of the greatest proportions and one offered by 
Morgan to mislead OSM.''
    WVHC did not suggest how to consider the cost to reclaim ``active'' 
mine sites that have been idle for several years. If these sites are in 
compliance with the backfilling and regrading requirements they should 
not pose large liabilities for completion of land reclamation. In 
regard to the potential liability for AMD treatment, we believe, as 
discussed above, that the Fund will eliminate the deficit and retain a 
positive cash balance for several years based on historic data. A more 
thorough analysis will be necessary if the State is to make accurate 
cost estimates and long-term predictions regarding water treatment. 
This is one of the responsibilities that the Advisory Council is 
charged with under law.

[[Page 37625]]

5. Federal Counterpart to State Plan

    WV Coal Association asserted that since the Plan [7-Up Plan] 
establishes a mechanism that has no equal in Federal law, and exceeds 
any program currently in place in any other primacy state, OSM has a 
duty to finalize the approval of the Plan that the agency first 
addressed in December 2001.
    We disagree with this comment. The State's efforts to improve its 
ABS, including the development of the 7-Up Plan, specifically relate to 
the requirements at 30 CFR 800.11(e) concerning alternative bonding 
systems.

6. Submittal of Comments on the Amendment

    WV Coal Association stated that WVHC's motion before a U.S. 
District Court seeking to have the second comment period declared 
illegal, make it improper for WVHC to submit comments during the second 
comment period.
    We disagree that the WVHC has waived its right to comment by 
arguing that the comment period that we opened on December 28, 2001, 
was invalid. When we opened that comment period, we opened it to all 
interested persons to provide them additional time to consider all 
comments submitted to date and so they could submit additional comments 
on this very complex and important topic.

7. Alternative Methods To Assure Long-Term Reclamation

    A commenter stated that history has shown that a per-ton tax on 
coal will not get abandoned mines reclaimed. The commenter provided the 
following recommendations to ensure total reclamation of all mined 
lands and long-term water treatment and to place the financial burden 
on the coal companies:
    1. A cash bond in the amount of the estimated actual reclamation 
cost should be in place before any mine permit is issued.
    2. A per-ton tax on that permit to create a trust to fund any water 
treatment that might be needed. This trust must be sufficient to fund 
the water treatment from the interest generated from the trust. If no 
water treatment or additional reclamation is needed after a 10-year 
period, the trust can be turned over to the permittee.
    3. A per-ton tax on all coal mined to pay for the reclamation of 
abandoned mine lands that have been previously left unreclaimed.
    In response, we note that we have no authority to dictate the 
specific form of the State's ABS. The State's ABS currently requires a 
site-specific bond with a $5,000 per acre limit. We believe that the 
State's site-specific bond plus the State's increased special 
reclamation tax rates will provide sufficient revenue to ensure 
complete reclamation of bond forfeiture sites. The State has confronted 
the issue of long-term water treatment by establishing the Advisory 
Council and assigning it the task of identifying long-term solutions.

8. Deletion of 25-Percent Limitation at CSR 38-2-12.5.d

    The WV Coal Association urged OSM to approve the proposed amendment 
to CSR 38-2-12.5.d. As noted above in Finding 1, we are approving the 
amendment.
    The WV Coal Association also stated that despite its support of the 
State's revisions to the ABS, the WV Coal Association maintains that 
OSM lacks the statutory authority to request changes related to water 
treatment at bond forfeiture sites, and to characterize the amendment 
as ``consistent'' with SMCRA and its implementing regulations is 
incorrect.
    We have previously responded to similar WV Coal Association 
assertions in our final rule decision published on December 28, 2001. 
See 66 FR 67446, 67451.

Federal Agency Comments

    Under 30 CFR 732.17(h)(11)(i) and section 503(b) of SMCRA, on 
September 28, 2001, and April 26, 2002, we requested comments on these 
amendments from various Federal agencies with an actual or potential 
interest in the West Virginia program (Administrative Record Numbers 
WV-1239 and WV-1299). We responded to a comment from the U.S. 
Department of Labor, Mine Safety and Health Administration (MSHA) on 
December 28, 2001 (66 FR 67446, 67452). By letter dated May 13, 2002, 
MSHA stated that it found no issues or impact on coal miner's health 
and safety.

Environmental Protection Agency (EPA) Comments

    Under 30 CFR 732.17(h)(11)(ii), we are required to obtain written 
concurrence from EPA for those provisions of the program amendment that 
relate to air or water quality standards issued under the authority of 
the Clean Water Act (33 U.S.C. 1251 et seq.) or the Clean Air Act (42 
U.S.C. 7401 et seq.). None of the revisions that West Virginia made and 
we approved on December 28, 2001, or that we are approving today, 
pertain to air or water quality standards. Therefore, we did not ask 
EPA for its concurrence on any of the proposed amendments.
    Under 30 CFR 732.17(h)(11)(i), on September 28, 2001, and April 26, 
2002, we requested comments from EPA on these amendments 
(Administrative Record Numbers WV-1239 and WV-1299) . The EPA responded 
by letter dated November 13, 2001 (Administrative Record Number WV-
1247). We responded to EPA's comments on December 28, 2001 (66 FR 
67446, 67452). By letter dated May 16, 2002, EPA stated it supports the 
deletion of the 25-percent limit on expenditure of bond funds for 
treating water at bond forfeiture sites.

VI. OSM's Decision

    Based on the above findings, we are approving the amendment to CSR 
38-2-12.5.d submitted to us on April 9, 2002. We are also removing the 
required program amendments codified at 30 CFR 948.16(jjj) and (lll).
    To implement this decision, we are amending the Federal regulations 
at 30 CFR part 948, which codify decisions concerning the West Virginia 
program. Our regulations at 30 CFR 732.17(h)(12) specify that all 
decisions approving or disapproving amendments will be published in the 
Federal Register and that they will be effective upon publication, 
unless the notice specifies a different date. We are making this final 
rule effective immediately to expedite the State program amendment 
process and to assist the State in making its program conform with the 
Federal standards as required by the Act.

VII. Procedural Determinations

Executive Order 12630--Takings

    This rule does not have takings implications. This determination is 
based on the analysis performed for the counterpart Federal regulation.

Executive Order 12866--Regulatory Planning and Review

    This rule is exempt from review by the Office of Management and 
Budget under Executive Order 12866.

Executive Order 12988--Civil Justice Reform

    The Department of the Interior has conducted the reviews required 
by section 3 of Executive Order 12988 and has determined that this rule 
meets the applicable standards of subsections (a) and (b) of that 
section. However, these standards are not applicable to the actual 
language of State regulatory programs and program amendments because 
each program is drafted and promulgated by a specific State, not by 
OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and 
the Federal regulations at 30 CFR

[[Page 37626]]

730.11, 732.15, and 732.17(h)(10), decisions on proposed State 
regulatory programs and program amendments submitted by the States must 
be based solely on a determination of whether the submittal is 
consistent with SMCRA and its implementing Federal regulations and 
whether the other requirements of 30 CFR parts 730, 731, and 732 have 
been met.

Executive Order 13132--Federalism

    This rule does not have Federalism implications. SMCRA delineates 
the roles of the Federal and State governments with regard to the 
regulation of surface coal mining and reclamation operations. One of 
the purposes of SMCRA is to ``establish a nationwide program to protect 
society and the environment from the adverse effects of surface coal 
mining operations.'' Section 503(a)(1) of SMCRA requires that State 
laws regulating surface coal mining and reclamation operations be ``in 
accordance with'' the requirements of SMCRA, and section 503(a)(7) 
requires that State programs contain rules and regulations ``consistent 
with'' regulations issued by the Secretary pursuant to SMCRA.

Executive Order 13211--Regulations That Significantly Affect the 
Supply, Distribution, or Use of Energy

    On May 18, 2001, the President issued Executive Order 13211 which 
requires agencies to prepare a Statement of Energy Effects for a rule 
that is (1) considered significant under Executive Order 12866, and (2) 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. Because this rule is exempt from review 
under Executive Order 12866 and is not expected to have a significant 
adverse effect on the supply, distribution, or use of energy, a 
Statement of Energy Effects is not required.

National Environmental Policy Act

    This rule does not require an environmental impact statement 
because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that 
agency decisions on proposed State regulatory program provisions do not 
constitute major Federal actions within the meaning of section 
102(2)(C) of the National Environmental Policy Act (42 U.S.C. 
4332(2)(C)).

Paperwork Reduction Act

    This rule does not contain information collection requirements that 
require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 
3507 et seq.).

Regulatory Flexibility Act

    The Department of the Interior certifies that this rule will not 
have a significant economic impact on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
The State submittal, which is the subject of this rule, is based upon 
counterpart Federal regulations for which an economic analysis was 
prepared and certification made that such regulations would not have a 
significant economic effect upon a substantial number of small 
entities. In making the determination as to whether this rule would 
have a significant economic impact, the Department relied upon the data 
and assumptions for the counterpart Federal regulations.

Small Business Regulatory Enforcement Fairness Act

    This rule is not a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act. This rule: (a) Does not 
have an annual effect on the economy of $100 million; (b) Will not 
cause a major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions; and (c) Does not have significant adverse effects on 
competition, employment, investment, productivity, innovation, or the 
ability of U.S.-based enterprises to compete with foreign-based 
enterprises. This determination is based upon the fact that the State 
submittal which is the subject of this rule is based upon counterpart 
Federal regulations for which an analysis was prepared and a 
determination made that the Federal regulation was not considered a 
major rule.

Unfunded Mandates

    This rule will not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of $100 million or more in any 
given year. This determination is based upon the fact that the State 
submittal, which is the subject of this rule, is based upon counterpart 
Federal regulations for which an analysis was prepared and a 
determination made that the Federal regulation did not impose an 
unfunded mandate.

List of Subjects in 30 CFR Part 948

    Intergovernmental relations, Surface mining, Underground mining.

    Dated: May 22, 2002.
Allen D. Klein,
Regional Director, Appalachian Regional Coordinating Center.

    For the reasons set out in the preamble, 30 CFR 948 is amended as 
set forth below:

PART 948--WEST VIRGINIA

    1. The authority citation for Part 948 continues to read as 
follows:

    Authority: 30 U.S.C. 1201 et seq.


    2. Section 948.15 is amended in the table by adding a new entry in 
chronological order by ``Date of publication of final rule'' to read as 
follows:


948.15  Approval of West Virginia regulatory program amendments.

* * * * *

------------------------------------------------------------------------
                                        Date of
  Original amendment submission     publication of         Citation/
              dates                   final rule          description
------------------------------------------------------------------------
 
                              * * * * * * *
September 24, 2001..............  May 29, 2002......  CSR 38-2-12.5.d.
April 9, 2002...................
------------------------------------------------------------------------

[sect] 948.16  [Amended]

    3. Section 948.16 is amended by removing and reserving paragraphs 
(jjj) and (lll).

[FR Doc. 02-13368 Filed 5-28-02; 8:45 am]
BILLING CODE 4310-05-P