GILLETTE NEWS RECORD 7-29-18 Coal's carousel

Jul 29, 2018

Coal's carousel

Industry's 'new normal' refocuses attention on reclamation


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Expansive prairie grasses that blow in the sometimes harsh winds under strikingly blue, cloud-speckled skies are home to healthy populations of deer and antelope and feed large herds of ranch cattle.

This simple, natural and unforgiving landscape helped earn Wyoming its nickname as the Cowboy State.

It’s also at the heart of a decades-long feud between the mining of the state’s vast mineral resources and environmental groups that claim the damage done by years of open-pit strip mining could be irreversible despite federal and state laws that are supposed to protect against it.

Mine flyover

It’s a debate that boils down to a perhaps over-simplified analogy that for some, coal mining means high-paying jobs, new schools and a flush state financial ledger. For others, “coal” is a four-letter word or signals environmental destruction.

Staking a claim

The Powder River Basin Resource Council is a Sheridan-based nonprofit that bristles at being called an environmental group, but it has been a consistent critic of Wyoming’s energy extraction industry, including coal mining.

In a report the group released earlier this month, the PRBRC says the state’s 14 coal mines aren’t living up to their reclamation obligations and that of the about 206 square miles of land being mined, only 2.4 percent has been restored to pre-mined condition.

The group’s concern is that Wyoming residents potentially could be stuck with a $2 billion bill to reclaim the large open-pit coal mines if companies go belly-up. It is rooted in simple economic math, said Shannon Anderson, a lawyer and spokeswoman for the PRBRC.

“What we’ve seen over time is that if something gets cut (because of budget concerns), it’s in the areas that aren’t making profit for the mines,” she said. Because reclamation costs money, “reclamation work overall slows down when the mines aren’t as profitable.”

That’s true now more than ever as the Powder River Basin, along with the rest of the United States thermal coal industry, is adjusting to lower production numbers and leaner profit margins.

Her group’s report, titled “Reclaim Wyoming: Prioritize Coal Mine Reclamation,” claims that despite decades of operating and having pulled billions of tons of coal out of the ground, a disproportionate percentage of mined land has been deemed reclaimed.

That late stage reclamation is called Phase 3, which has the highest standards to meet before the land is declared as back to original or as close to it as possible.

“When mines have completed Phase 3 reclamation in Wyoming, the results have been good,” the report says. “The issue, then, is more about quantity than quality. The right changes to existing practices would increase reclamation and ensure that is happens during the productive years of a mine’s life, when revenues are sufficient to pay for it.”

A recent and unprecedented bust of the coal industry saw three of the nation’s and PRB’s largest coal producers file for and emerge from Chapter 11 bankruptcy reorganization.

Anderson said those bankruptcies should be a wake-up call for Wyoming residents and officials that while nearly all of the $2 billion in outstanding reclamation obligations for Powder River Basin mines are protected by third-party surety bonds, that doesn’t mean the state is fully protected.

“No financial assurance instrument is perfect,” she said about the reliability of those bonds. “The Government Accountability Office did find there have been some default of coal bonds over the years. Not in Wyoming, but it does make it difficult when you’re dealing with hundreds of millions of dollars.”

A matter of perspective

While on the surface, the Powder River Basin Resource Council’s report may make sense — companies losing money and tightening their belts are less likely to spend millions on reclamation — it’s skewed to support an anti-coal agenda, said Rick Curtsinger, a spokesman for Cloud Peak Energy.

With three Powder River Basin coal mines, including two in Campbell County, Cloud Peak is the only PRB-only coal mining company operating in the basin. What the Resource Council’s report fails to mention is that no Wyoming coal mines are or have been out of compliance with their reclamation obligations, he said. In fact, the high quality and ingenuity of the reclamation happening here has been recognized again and again as the best in the nation.

“The Powder River Basin Resource Council is essentially opposed to any natural resource development and would cripple Wyoming’s economy and the standard of living for thousands of Wyoming families,” he said.

The report is an example of that and ignores that companies like Cloud Peak take reclamation seriously and go above and beyond what’s legally required to accomplish it, he said.

“It has a well-established track record of distorting the facts to fit its anti-resource development narrative and this work of fiction is true to form.”

The truth between those polarizing perspectives lies somewhere in the middle, said Robert Godby, director and associate professor at the Department of Economics and Finance College of Business at the University of Wyoming. He said the real debate is focused on the difference between companies following the letter of the law when it comes to reclaiming mined land and the spirit of the law.

Just how those are defined is subject to very broad interpretations, he said.

“The concern is companies spend all their time doing the less expensive parts and as long as they’re engaging in reclamation, they’re following what’s necessary to stay in compliance,” Godby said. “The problem is, they never seem to complete it.

“The concern then is you could end up with remediated lands that aren’t fully restored. It’s not necessarily the type of remediation that was anticipated and it’s mainly because the law isn’t specific enough about timeframes.”

He said the fear for some is that Wyoming not repeat what happened when coal mines went bust and were abandoned in Appalachia.

“What we don’t want to happen is what happened in Appalachia, where you have significant amounts of remediation and nobody left around to do it,” Godby said. “That was the lesson we learned there, that you better have the assets set aside.”

Letter vs. spirit of the law

Ensuring Wyoming residents don’t end up having to pay hundreds of millions of dollars, or possibly billions, to clean up someone else’s mess is the job of the Wyoming Department of Environmental Quality.

While state officials won’t comment specifically on the Powder River Basin Resource Council’s report, they say none of the mines operating in the state are out of compliance with their permits and reclamation expectations.

“The law is the law,” said Kyle Wendtland, administrator of the Wyoming Land Quality Division and former environmental manager at Cloud Peak’s Antelope mine south of Gillette. “It’s real simple. I don’t have authority to reach outside the boundaries of the law and can’t reach beyond those requirements. That’s just a place we cannot go.”

He said the state is “well aware” of the drastic change the coal industry has been going through and that “clearly, those bankruptcies highlighted some issues and deficiencies in the rules because they hadn’t been updated since 1982.”

That said, “We have not had a default with coal mining in Wyoming,” Wendtland said.

It’s difficult to determine whether a company’s only doing the bare minimum to stay in compliance or going above and beyond to reclaim the land as good or better than before it was mined, said Keith Guille, a spokesman for the DEQ. Appearances also don’t always tell the full story in making that determination, he said.

According to the DEQ’s most current numbers, there are 169,000 acres of what’s considered disturbed mining land, including 38,000 acres that have long-term structures on them. Of that, 77,000 acres, or about 58 percent, are in a reclamation phase, meaning that work has already begun. And of those 77,000 acres, nearly half have been reclaimed to the point that the land is in used for agriculture.

Because those tracts of land haven’t been released doesn’t mean the work isn’t happening, Wendland said. That’s because it doesn’t make financial sense to seek release of small parcels at a time.

“In most cases, a logical bond release unit is a logical pasture size,” he said. “That is usually not anything under 1,000 acres. In most cases, it would be a couple thousand acres. Those companies aren’t going to go out and spend money to do Phase 3 release work on a 200-acre reclamation.”

While some highlight the overall expanse of acres disturbed by coal mining, the numbers actually show that, on average, only about 40 percent of the mines’ leases are active.

“That tells me as a regulator these guys are reclaiming pretty darn contemporaneously” to mining, Wendtland said.

Contrary to some perceptions, Curtsinger said mining companies are committed to reclamation.

“When anti-fossil fuel groups claim that large amounts of land remain unreclaimed, they include thousands of acres of land that is fully reclaimed, but not yet out of bond, as well as tens of thousands of acres that have never been disturbed,” he said.

In the long run, reports like the one recently issued by the Powder River Basin Resource Council could backfire.

“Efforts by anti-fossil fuel groups to increase mining costs by gaming the reclamation rules are simply counterproductive to reclamation,” Curtsinger said. “The more financial pressure artificially imposed on mining by raising leasing costs, taxes and royalties, the more likely companies will be unable to finish their important reclamation work.”

An economic driver

Making sure the land is reclaimed protects an important segment of the local economy for coal mining communities like Gillette and those around the Powder River Basin, Godby said. That’s because, like mining, reclamation also provides good-paying jobs and work for local support businesses.

“The remediation process in itself is an economic activity to replace lost income were a mine to close,” he said. “Cities and towns with coal mines should be very concerned that remediation rules are there.”

While conventional theory says that when production is down, that’s a perfect time to switch some labor from mining to reclamation, that doesn’t always work out in practice, Godby said. That’s because companies also are under pressure to show their stockholders as much profit as possible. Paying the same hours or more to mine less coal is counterproductive to that.

“There’s a tendency for people in mining towns to feel that what’s in the best interests of the coal companies is in their best interests,” he said. “But the bottom line is, mining is a transitional outcome. It doesn’t go on indefinitely.

“The assurance that remediation happens also will create a transitional source of income (for a local labor force) as that community moves away from being a coal town,” Godby said.

The transition from being expert at mining coal to expert at reclaiming the land also helps retrain the workforce and makes those workers valuable in another industry, said Roger Coupao, former chairman of the University of Wyoming’s Department of Agricultural Economics who has done extensive work on reclamation policy in the state.

“To get that growth and vegetation back on those restored lands takes some expertise,” he said. “When you develop that expertise in the region, that can be used in other states or in other countries eventually.”

Where it’s worked

The areas that have been reclaimed in Wyoming are examples of doing it right, Coupao said.

At the Dave Johnston coal-fired power plant near Glenrock, the reclamation of its mine has not only returned the land to a natural state, some of that acreage has been repurposed as a wind farm.

“They went through the entire process from beginning to reforming the land and the hillside to a successful vegetative reestablishment,” he said. “It’s productive for agriculture and wildlife and for the wind turbines. The interesting thing was it was a culmination of mining company expertise and the university figuring out a way that makes sense.”

Another example is what Coupao calls the “slice and reclaim” method he observed at Peabody Energy Corp.’s North Antelope Rochelle mine near Wright.

“Basically, they slice off a bunch of coal then reclaim back behind it,” he said. “So, it’s kind of like slice, reclaim, slice, reclaim following the coal seam.”

What stands out is that the work wasn’t totally invasive for local wildlife, Coupao said.

“We were driving into the pit and this big elk herd came out right in front of us,” he said.

Achieving that kind of synergy isn’t easy, he said. It takes a lot of science to know exactly how to reclaim the land with the correct mix of soils, grasses, shrubs and even streams or ponds. He said that lesson was learned decades ago when a mine reclaimed its disturbed land but not the local ecosystem.

“They made this beautiful area with ponds and everything,” Coupao said. “Unfortunately, those ponds became supermarkets for predators. This kind of work requires a pretty sophisticated understanding of how an ecosystem works.”

The ecosystem on Wyoming’s prairies is difficult to restore and has been a challenge for mining companies. One of those challenges, keeping invasive cheatgrass out until native plants can regain a foothold, led to some creative work at the Antelope mine.

While working for Cloud Peak, Wendtland developed a device to drag behind a tractor to fight the cheatgrass. His first working tool was band with a piece of used drill pipe and recycled drag line cable attached to a couple of lengths of chain.

The tool allows the mine to clear cheatgrass from large reclaimed areas without using herbicides, controlled burns or having to clear areas of all plant life.

Don’t repeat history

In the end, if Wyoming gets stuck paying to reclaim open-pit coal mines, it won’t be because it was an unhappy surprise, Anderson said. The coal-bed methane bust that left thousands of abandoned wells already has cost the state millions of dollars and will cost millions more before the job of plugging them is done.

The potential liability for the same to happen with coal would be on a much larger scale.

“We can see this coming,” she said. “You see these coal plant retirements and you know those are supplied by Powder River Basin mines. You know it’s going to happen. It’s not something that’s going to appear without any warning.”

What Anderson and the Resource Council don’t factor into their arguments are the people who work and live in the Powder River Basin, Curtsinger said.

“We will return all of the land that we have disturbed to a shape as good, and likely better, than before mining began,” he said. “We do this not only because it’s required … but in large part because our employees who fish and hunt, hike and bird watch, camp and enjoy the outdoors demand it.”

Being accountable to the letter of the law is required, he said, but so is being accountable to the expectations of the people who live here.

That’s why when coal mining’s finally finished, Curtsinger said he’s confident Wyoming will still be known for its expansive prairies that blow in the sometimes harsh winds and are home to healthy populations of deer and antelope and feed large herds of ranch cattle.