&EPA
United States
Environmental Protection
Agency
Office of Water
(4303)
EPA821-B-00-002
March 2000
Economic and
Environmental Impact
Assessment of Proposed
Effluent Limitations
Guidelines and
Standards for the
Coal Mining Industry:
Remining and Western
Alkaline Subcategories
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Economic and Environmental Impact Assessment
of Proposed Effluent Limitations Guidelines and Standards
for the Coal Mining Industry:
Remining and Western Alkaline Subcategories
Kristen L. Strellec
Engineering and Analysis Division
Office of Science and Technology
U.S. Environmental Protection Agency
Washington, DC 20460
March 2000
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Table of Contents
Executive Summary ES-1
Introduction ES-1
Coal Remining Subcategory ES-1
Western Alkaline Coal Mining Subcategory ES-2
Industry Compliance Costs ES-2
Coal Remining Subcategory ES-3
Western Alkaline Coal Mining Subcategory ES-4
Industry Impacts ES-6
Economic Achievability ES-6
Impacts on Small Firms ES-8
Impacts on New Sources ES-8
Additional Economic Impacts ES-9
Costs to NPDES Permitting Authorities ES-9
Community Impacts ES-9
Foreign Trade Impacts ES-10
Environmental Impacts and Benefits ES-10
Coal Remining Subcategory ES-10
Western Alkaline Coal Mining Subcategory ES-12
Social Costs and Benefits ES-14
Chapter 1: Introduction 1-1
1.0 Overview and Definitions 1-1
1.1 Coal Remining Subcategory 1-2
1.1.1 Background 1-2
1.1.2 Summary of the Proposed Subcategory 1-4
1.2 Western Alkaline Coal Mining Subcategory 1-5
1.2.1 Background 1-5
1.2.2 Summary of the Proposed Subcategory 1-6
1.3 Structure of the Report 1-7
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Chapter 2: Data Sources 2-1
2.0 Introduction 2-1
2.1 General Industry Sources 2-1
2.1.1 DOE/EIA Coal Data (Form 7A) 2-1
2.1.2 Keystone Coal Industry Manual 2-2
2.1.3 Census Data 2-2
2.1.4 Financial Data 2-2
2.2 Sources for Coal Remining Subcategory 2-3
2.2.1 AMLIS Database 2-3
2.2.2 NALIS Database 2-3
2.2.3 EPA Coal Remining Database 2-4
2.2.4 Interstate Mining Compact Commission Solicitation 2-5
2.2.5 Total Maximum Daily Load Tracking System 2-6
2.2.6 EPA Region III GIS Database 2-6
2.2.7 Pennsylvania's 112 Remining Site Study 2-7
2.3 Sources for Western Alkaline Coal Mining Subcategory 2-7
2.3.1 Profile of Affected Coal Mining Operations 2-7
2.3.2 Model Mine Analysis 2-8
2.3.3 Information on Environmental Impacts 2-8
Chapter 3: Industry Profile and Economic Baseline 3-1
3.0 Introduction 3-1
3.1 Overview of the Coal Industry 3-1
3.1.1 Coal Remining 3-3
3.1.2 Western Alkaline Coal Mining 3-3
3.2 Current Regulatory Requirements 3-4
3.2.1 Current Effluent Guidelines 3-4
3.2.2 SMCRA 3-5
3.2.3 The Rahall Amendment 3-7
3.2.4 State Remining Permit Programs 3-7
3.3 Characterizing the Economic Baseline 3-8
3.3.1 Coal Remining 3-8
3.3.2 Western Alkaline Coal Mining 3-11
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Chapter 4: Industry Compliance Costs 4-1
4.0 Introduction 4-1
4.1 Coal Remining 4-2
4.1.1 Methodology 4-2
4.1.2 Monitoring Costs 4-2
4.1.3 Pollution Abatement Plan Costs 4-6
4.1.4 Total Annual Compliance Costs for the Coal Remining Subcategory 4-7
4.2 Western Alkaline Coal Mining 4-7
4.2.1 Methodology 4-7
4.2.2 Watershed Modeling Costs 4-8
4.2.3 Reduced Sediment Control Costs 4-8
4.2.4 Savings Associated with Earlier Bond Release 4-11
4.2.5 Total Compliance Costs for the Western Alkaline Coal Mining Subcategory 4-18
4.3 Summary of Compliance Costs 4-18
Chapter 5: Industry Impacts 5-1
5.0 Introduction 5-1
5.1 Impacts of the Coal Remining Subcategory 5-1
5.1.1 Methodology 5-1
5.1.2 Results 5-2
5.1.3 Impacts on Small Firms 5-5
5.2 Impacts of the Western Alkaline Coal Mining Subcategory 5-6
5.2.1 Methodology 5-6
5.2.2 Results 5-6
5.2.3 Impacts on Small Firms 5-8
5.2.4 Impacts on New Sources 5-8
Chapter 6: Additional Economic Impacts 6-1
6.0 Introduction 6-1
6.1 Costs to the NPDES Permitting Authority 6-1
6.2 Community Impacts 6-2
6.3 Foreign Trade Impacts 6-3
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Chapter 7: Cost-Effectiveness 7-1
Chapter 8: Environmental Impacts and Benefits 8-1
8.0 Introduction 8-1
8.1 Coal Remining Subcategory 8-1
8.1.1 Environmental Impacts of AML 8-1
8.1.2 Impacts of Remining on Environmental Quality 8-2
8.1.3 Methodology for Estimating Benefits 8-4
8.1.4 Results 8-5
8.2 Western Alkaline Coal Mining Subcategory 8-10
8.2.1 Environmental Impacts from Western Mining 8-10
8.2.2 Potential Benefits Categories 8-10
8.2.3 Methodology and Results 8-12
Chapter 9: Social Costs and Benefits of the Proposed Rule 9-1
9.0 Introduction 9-1
9.1 Social Costs and Benefits of the Proposed Remining Subcategory 9-1
9.2 Social Costs and Benefits of the Proposed Western Alkaline
Coal Mining Subcategory 9-4
References R-l
Appendix A: State Remining Programs A-l
A. 1 State Programs A-l
A.2 Summary of State Sampling Requirements A-4
Appendix B: AML Reclamation Program B-l
B.I AML Reclamation Program and Fund B-l
B.2 AMLIS B-2
IV
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List of Tables
Table ES-1: Annual Compliance Costs for the Proposed Coal Remining Subcategory ES-4
Table ES-2: Annual Costs and Cost Savings for the Proposed Western Alkaline Coal Mining
Subcategory ES-6
Table ES-3: Estimated Benefits for the Proposed Coal Remining Subcategory ES-12
Table ES-4 Estimated Benefits for the Proposed Western Alkaline Coal Mining Subcategory ES-14
Table ES-5: Annual Social Costs and Benefits for the Proposed
Coal Remining Subcategory $1998) ES-15
Table ES-6: Annual Social Costs, Cost Savings and Benefits for the Proposed Western
Alkaline Coal Mining Subcategory ($1998) ES-16
Table 3-1: Potential Remining Operations by State 3-9
Table 3-2: Estimated Remining Operations Permitted Annually 3-10
Table 3-3: Annual Estimates of Affected Remining Sites Used in the Economic and Environmental
Impact Analysis 3-11
Table 4-1: Estimated Increase in Annual Monitoring Costs: Low Estimate 4-4
Table 4-2: Estimated Increase in Annual Monitoring Costs: High Estimate 4-5
Table 4-3: Annual Costs for the Coal Remining Subcategory 4-7
Table 4-4: Model Mine Reclamation Sediment Control Costs:
Current Effluent Guideline versus Proposed Subcategory (1998 dollars) 4-9
Table 4-5: Present Value of Sediment Control Savings per Acre Reclaimed 4-10
Table 4-6: Estimated Savings in Sediment Control Costs 4-11
Table 4-7: Estimated Savings from Earlier Phase 2 Bond Release- Low Estimate 4-16
Table 4-8: Estimated Savings from Earlier Phase 2 Bond Release- High Estimate 4-17
Table 4-9: Annual Costs and Cost Savings for the Western Alkaline Coal Mining Subcategory .... 4-18
Table 4-10: Summary of Estimated Annual Compliance Costs and Cost Savings 4-18
Table 5-1: Impact of Increased Annual Monitoring Costs Per Ton of Coal Mined 5-4
Table 5-2: Estimated Savings to Western Surface Mines, Per Ton and as a Percent of Current Annual
Production Value, Selected Mines 5-9
Table 8-1: Summary of Benefit Estimates for the Coal Remining Subcategory 8-9
Table 8-2: Annual Land-Related Benefits from Western Alkaline Coal Mining Subcategory 8-15
Table 8-3: Total Monetized Benefits for the Western Alkaline Coal Mining Subcategory 8-18
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Table 9-1: Annual Social Costs and Benefits of the Proposed Coal Remining Subcategory ($1998) ... 9-2
Table 9-2: Assumptions, Exclusions & Uncertainties in Estimated Coal Remining Subcategory
Costs and Benefits 9-3
Table 9-3: Social Costs/Savings and Benefits of the Proposed Western Alkaline Coal Mining
Subcategory ($1998) 9-5
Table 9-4: Assumptions, Omissions & Uncertainties in Estimated
Western Alkaline Coal Mining Subcategory Costs and Benefits 9-6
Table A.I: State Sampling Requirements: Rahall vs. Non-Rahall Sites A-5
VI
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Executive Summary
Introduction
EPA is proposing amendments to effluent limitations guidelines and standards for coal mining under the
Clean Water Act (40 CFR part 434). EPA is proposing two new subcategories for coal mining, the first
applying to coal remining operations and the second applying to reclamation activities at western alkaline
coal mines. This Economic and Environmental Impact Assessment (hereafter referred to as the EA)
presents an analysis of costs, benefits, economic impacts and environmental impacts attributed to each of
the proposed subcategories.
Coal Remining Subcategory
Coal remining is the mining of surface mine lands, underground mine lands, and coal refuse piles that were
abandoned prior to the enactment of the Surface Mining Control and Reclamation Act (SMCRA) in 1977.
Prior to SMCRA, reclamation of mine lands was not a federal requirement. Many coal mines were left in
an abandoned state and continue to degrade the environment and pose health and safety risks. The acid
mine drainage that originates from these abandoned mine lands is considered "pre-existing discharges."
Acid mine drainage from abandoned coal mines is a major environmental problem in the Appalachian and
mid-Continent Coal Regions of the eastern United States. EPA is proposing the Coal Remining
Subcategory to provide regulatory guidance to encourage remining activities, and in turn, reduce acid mine
drainage and improve water quality. Remining is also expected to reduce the risk of injury at abandoned
sites by closing mine openings, removing highwalls, and stabilizing spoils.
EPA is proposing BPT, BCT, and BAT limitations that have an equivalent technical basis for the Coal
Remining Subcategory. The proposed limitations are defined through a combination of numeric and non-
numeric standards. Specifically, EPA is proposing that BAT is implementation of a pollution abatement
plan that incorporates best management practices designed to improve pH and reduce pollutant levels of
iron and manganese, and a requirement that such pollutant levels are not increased over baseline conditions.
This is essentially the level of treatment currently required under permits issued in accordance with the
Rahall Amendment to the Clean Water Act. EPA is not proposing NSPS standards.
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Western Alkaline Coal Mining Subcategory
The existing effluent guidelines for reclamation areas establish numeric effluent limits based on the use of
sedimentation pond technology. The discharge from reclamation areas must meet effluent limitations for
settleable solids and pH. Although sedimentation ponds are proven to be effective at reducing sediment
discharge, EPA believes that there are numerous non-water quality impacts from their use in the arid west
that need to be considered. Controlling sediment in areas that naturally contain large amounts of sediment
through the exclusive use of sedimentation ponds can disturb the natural hydrologic balance, accelerate
erosion, reduce groundwater recharge, reduce water availability, and impact large areas of land for pond
construction. To address these impacts, EPA is proposing a new subcategory that requires coal mine
operators to implement BMPs so that post-mined lands are reclaimed to mimic natural conditions that were
present prior to mining activities.
EPA is proposing BPT, BAT, and NSPS limitations that have an equivalent technical basis for the Western
Alkaline Coal Mining Subcategory. EPA is proposing that a mine operator must develop a site-specific
sediment control plan for surface reclamation areas. The sediment control plan must identify BMPs, and
present design, construction, and maintenance specifications and expected performance. Specifically, EPA
is proposing that BPT consist of BMP requirements projected through modeling to maintain average annual
sediment yield at or below pre-mined undisturbed conditions. EPA would require that the coal mining
operator develop and implement a sediment control plan to demonstrate compliance. In addition, EPA is
proposing that BAT and NSPS standards be established equivalent to BPT. EPA is not proposing to
establish BCT limitations at this time.
This executive summary reviews the major components of the EA, including: (1) estimates of industry
compliance costs; (2) evaluation of the economic impacts to the coal mining industry, including impacts on
small firms and new sources; (3) analysis of additional economic impacts, including costs to NPDES
permitting authorities, community impacts, and impacts on foreign trade; (4) evaluation of environmental
impacts and benefits; and (5) a summary of the social costs and benefits attributed to the proposed rule.
Industry Compliance Costs
EPA analyzed the costs and cost savings to the coal mining industry attributed to the proposed rule.
These are the changes in compliance costs associated with differences between current requirements and
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requirements under the proposed subcategories. Except where noted, all costs are reported in 1998 dollars;
the present value of costs that are incurred in the future is calculated using a 7 percent discount rate; and
annualized costs are developed using an annualization period of 10 years and a 7 percent discount rate.
Coal Remining Subcategory
EPA estimated economic baseline conditions for remining based on existing state and federal regulations
and current industry practices. EPA assumed as economic baseline conditions remining under a Rahall
permit, pursuant to section 301(p), rather than comparing compliance with Part 434 regulations. EPA
projects that states will permit 43 to 61 new remining sites each year under the proposed subcategory (see
Chapter 3). EPA projected costs for each remining site by calculating the cost of added requirements
beyond those currently required for Rahall permits. These include the cost of increased monitoring
requirements for determining baseline, the cost of potential increases in compliance monitoring
requirements, and the potential costs associated with developing and implementing the required pollution
abatement plan.
To assess the increased monitoring requirements of the proposal, EPA evaluated current state requirements
for operations permitted under the Rahall provision and calculated the proposed sample collection costs
that exceed the current state requirements. Under the proposed rule, EPA is requiring that operators
conduct one year of monthly sampling to characterize the baseline pollutant levels for pH, iron (total), and
manganese (total). Although EPA is not requiring a specific monitoring frequency to demonstrate
compliance, EPA has assumed monthly compliance monitoring for costing purposes. EPA estimates that
the total annual incremental monitoring costs are in the range of $133,500 to $193,500. Of this,
approximately $83,000 to $120,000 is associated with incremental baseline monitoring requirements and
approximately $50,500 to $73,500 results from incremental compliance monitoring during a five year
remining period.
In addition to monitoring requirements, remining operators must develop and implement a site-specific
pollution abatement plan for each remining site. In many cases, EPA believes that the requirements for the
pollution abatement plan will be satisfied by an approved SMCRA plan. However, EPA recognizes that
some operators may be required to implement additional or incremental BMPs under the proposed rule
beyond what is included in a SMCRA-approved pollution abatement plan. EPA developed a general
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estimate of the potential costs of additional BMPs based on review of existing remining permits contained
in the EPA's Coal Remining Database (U.S. EPA, 1999a), and on information provided in the Coal
Remining Best Management Practices Guidance Manual (U.S. EPA, 2000d). Total estimated costs
associated with potential additional BMP effort are between $199,500 and $565,000 per year.
The total estimated annual compliance costs associated with the proposed Coal Remining Subcategory are
approximately $333,000 to $758,500 per year. Table ES-1 summarizes the incremental compliance costs
associated with the proposed subcategory.
Table ES-1.: Annual Compliance Costs for the Proposed Coal
Remining Subcategory
Monitoring Costs $133,500 - $193,500
Additional BMP Effort $199,500 - $565,000
Total Compliance Costs $333,000 - $758,500
Western Alkaline Coal Mining Subcategory
EPA determined that 46 surface coal mines and 24 underground coal mines are likely to be in the scope of
the proposed subcategory. EPA believes that the proposed rule will be at worst cost-neutral for the
underground operators. Although EPA believes that compliance with the proposed rule will result in
operational savings for many underground producers, EPA did not estimate the savings due to data
limitations. Hence, only the 46 surface mines were included in the analyses of costs and benefits.
EPA expects that the sediment control plan will largely consist of materials generated as part of the
SMCRA permit application. The requirement to use watershed modeling techniques is also consistent with
these materials. While the Office of Surface Mining (OSM) does not specifically require modeling, most
coal mine operators already perform watershed modeling to support their SMCRA permit application that
is sufficient to meet the proposed requirements. However, some incremental costs may occur for cases
where the proposed rule increases model complexity.
Information provided by OSM indicates that a surface mine operator might incur a one-time additional
cost of up to $50,000 to meet the proposed watershed modeling requirements. Although most sites are
not expected to incur any additional modeling costs, EPA conservatively assumed that all 46 existing
surface operators would incur additional costs of $50,000. The $50,000 estimate represents an
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annualized cost of $7,119 per mine, resulting in a total annualized cost estimate of $327,500. These costs
would be offset by reduced sediment control costs associated with implementing the proposed sediment
control plans and savings resulting from an expected reduction in the reclamation bonding period.
EPA projects that reclamation costs at western alkaline surface coal mines will be lower with the proposed
BMP approach than with exclusive use of sedimentation ponds. An analysis provided by the Western
Coal Mining Work Group (WCMWG) calculated cost savings for a representative model coal mine. EPA
extrapolated from the WCMWG model mine analysis and industry profile information to estimate savings
in sediment control costs. EPA projects that the proposed subcategory will result in annual savings of
$30.8 million in sediment control costs.
EPA also calculated cost savings that may result due to earlier Phase 2 bond release. The OSM hydrology
requirements to release performance bonds at Phase 2 at 30 CFRpart 800.40(c)(l) requires compliance
with the existing effluent standard. The use of BMPs under the proposed subcategory is expected to allow
earlier Phase 2 bond release, because less time will be needed to meed the hydrology bond release
requirements. According to information provided by the WCMWG, the BMP-based approach would
reduce the time it takes reclaimed lands to qualify for Phase 2 bond release from ten years or more to
approximately five years. EPA used a number of simplifying assumptions to estimate the savings
associated with earlier Phase 2 bond release. The WCMWG industry profile provides information
necessary to calculate associated bond savings for 26 mines. The total estimated savings for these mines
range from $197,000 to $289,000 when annualized over a five year permit period. EPA assumed that the
remaining 20 mines for which savings could not be calculated would achieve the average savings per mine
($7,600 to $11,100), resulting in total annualized savings of between $349,000 and $511,500.
The estimated net savings in compliance costs associated with the proposed subcategory, considering
additional modeling costs and the savings to mine operations in sediment control and bonding costs, is
estimated to be approximately $31.0 million, as shown in Table ES-2.
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Table ES-2: Annual Costs and Cost Savings for the Proposed Western
Alkaline Coal Mining Subcategory
Incremental Modeling Costs $ 327,500
Sediment Control Costs (Savings) ($ 30,835,000)
Earlier Phase 2 Bond Release (Savings) ($ 349,000-$ 511,500)
Total Compliance Costs (Savings) ($ 30,857,000 - $ 31,019,000)
Industry Impacts
EPA is required to assess the economic achievability of effluent limitations guidelines and standards that
are based on the best available technology economically achievable (BAT). To assess the economic
achievability of the requirements, EPA assesses the expected impacts on the profitability of the potentially
affected facilities, the firms that own these facilities, and the directly-affected industry as a whole.
Requirements that may result in significant numbers of facility or firm closures, or that may otherwise
cause significant reductions in financial returns to the affected economic activities, may be deemed to be
economically unachievable.
Economic Achievability
For purposes of this economic impact analysis, EPA assumes that the proposed Coal Remining
Subcategory will not impact existing Rahall-type permits with established BPJ limitations. Thus, the
proposed Subcategory will not have any economic impacts on operations under existing Rahall-type
permits. For new permits, remining operators will have the opportunity to assess the overall economic
return to remining in compliance with the proposed requirements before any investment is made at a
remining site.
The methods used to assess the economic achievability of the proposed Coal Remining Subcategory
differ from approaches EPA has used in analyses for other rules because EPA believes that the proposed
requirements will only affect new remining permits. Hence, information needed to quantify the
economic impacts to industry in terms of facility closures or impacts to firm financial ratios is not
available. Alternatively, EPA compared the potential added costs of the proposed requirements with the
current price of coal produced from the Appalachian region to provide a measure of economic impacts.
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Where additional requirements imposed by the proposed subcategory represent only a small percentage of
the price received for coal, EPA concludes that the proposed requirements will not have a significant
economic impact on potential remining projects.
Under worst-case assumptions, EPA estimates that additional monitoring costs could represent as much as
$0.11 per ton remined. However, even this worst-case estimate represents less than one-half of one percent
of the 1997 average price of $26.55 per ton of coal mined in the Appalachian region. These findings
suggest that the proposed incremental monitoring requirements will not deter investments in remining
projects. EPA estimates that the additional BMP costs associated with the pollution abatement plans could
represent 5.6 cents per ton of coal recovered, or two-tenths of one percent of the 1997 average price of coal
mined in the Appalachian region. However, these additional BMPs will be site-specific, with economic
achievability considered in BPJ determination.
Since the proposed Western Alkaline Coal Mining Subcategory results in net cost savings to existing mine
operations, it is inherently economically achievable. Because reclamation costs under the proposal will be
less than or equal to those under the existing effluent guidelines for all individual operators, no facility
closures or direct job losses associated with post-compliance closure are expected. However, EPA
estimated changes in labor requirements attributed to the proposed subcategory by extrapolating from the
WCMWG model mine results, which calculated change in labor hours associated with changes in the types
of erosion and sediment control structures used. EPA estimates that the proposed subcategory could result
in the loss of 9.2 full-time equivalent employees (FTEs) per year. This represents 0.1 percent of the total
1997 coal mine employment (6,862 FTEs) in the western alkaline region states.
The cost savings associated with the proposed rule are not expected to have a substantial impact on the
industry average cost of mining per ton of coal, and are therefore not expected to have a major impact on
coal prices. While the savings are substantial in aggregate, on average the savings represent a small
portion of the total value of coal produced by the affected mines. The proposed rule is not expected to
result in significant industry-level changes in coal production or prices.
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Impacts on Small Firms
The Regulatory Flexibility Act as Amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA), generally requires an agency to prepare a regulatory flexibility analysis for any rule
subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any
other statute unless the agency certifies that the rule will not have a significant economic impact on a
substantial number of small entities. An agency may certify that a rule will not have a significant economic
impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a
positive effect on all small entities subject to the rule.
For purposes of this analysis, small entity is defined as: (1) a small business that has 500 or fewer
employees (based on SBA size standards); (2) a small governmental jurisdiction that is a government of a
city, county, town, school district or special district with a population less than 50,000; and (3) a small
organization that is any not-for-profit enterprise which is independently owned and operated and is not
dominant in its field.
The proposed Coal Remining Subcategory provides standardized procedures for developing effluent limits
for pre-existing discharges, thereby reducing the uncertainty involved in interpreting and implementing
current Rahall requirements. The proposed subcategory is intended to remove barriers to the permitting of
remining sites with pre-existing discharges, and is therefore expected to encourage remining activities by
small entities. Thus, the Agency concludes that the proposed subcategory will relieve regulatory burden for
all small entities. EPA projects that the proposed Western Alkaline Coal Mining Subcategory will result in
cost savings for all small surface mining operators. For all small underground operators, EPA projects no
incremental costs, and the Agency believes that many are likely to experience some cost savings. Thus, the
Agency concludes that the proposed subcategory will have a positive impact on all affected small entities.
The Agency thereby certifies that the proposed rule will not have a significant economic impact on a
substantial number of small entities.
Impacts on New Sources
EPA does not believe that the proposed rule will present any barriers to entry in the coal mining
industry. EPA is not proposing NSPS limitations for the Coal Remining Subcategory. EPA believes that
the proposed option will not impact existing remining permits. For new permits, remining operators will
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have the opportunity to choose among potential remining sites, and will only select sites that they believe
are economically achievable to remine. The proposed requirements will not create any barriers to entry in
coal remining, but instead are specifically designed to encourage new remining operations.
EPA believes that new sources will be able to comply with the NSPS requirements under the proposed
Western Alkaline Coal Mining Subcategory at costs that are similar to or less than the costs for existing
operators. New sources can plan for site-specific BMP reclamation from the outset rather than altering
existing reclamation plans based on the new requirements. For example, new sources would be able to
avoid costs associated with designing and installing sedimentation ponds. There is nothing about the
proposed rule that would give existing operators a cost advantage over new mine operators. Therefore,
NSPS limitations will not present a barrier to entry for new operators.
Additional Economic Impacts
EPA evaluated three additional categories of economic impacts for the proposed rule: costs to NPDES
permitting authorities, community impacts (due to potential impacts on employment), and potential foreign
trade impacts.
Costs to NPDES Permitting Authorities
NPDES permitting authorities will incur additional costs to review new permit applications and issue
revised permits based on the proposed rule. Total additional NPDES permit review costs for the proposed
rule are estimated to be between $60,000 and $80,000 per year ($47,500 to $67,500 for remining permits,
and $12,500 for permits under the Western Alkaline Coal Mining Subcategory).
Community Impacts
The proposed rule could have community-level and regional impacts if it significantly altered the
competitive position of coal produced in different regions of the country, or led to growth or reductions in
employment in different regions and communities. The proposed rule is not likely to have significant
impacts on relative coal production in the West versus the East. The proposed Coal Remining Subcategory
is likely to shift the location of production and employment toward eligible abandoned mine lands, but not
to increase national coal production or affect coal prices significantly overall.
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EPA projects that impacts of the proposed rule on mine employment will also be minor. Increased
remining might create new employment opportunities in some locations. As discussed above, EPA
estimated a reduction in labor requirements of 9.2 FTEs per year for the proposed Western Alkaline Coal
Mining Subcategory. Regional multipliers relating total direct and indirect employment to coal industry
employment range from 2.6 to 3.2 for the western alkaline states. Therefore, the total impact on
employment, direct and indirect, that may result from the proposed Western Alkaline Coal Mining
Subcategory is a reduction of between 24 and 29 FTEs per year.
Foreign Trade Impacts
EPA does not expect any foreign trade impacts as a result of the proposed rule. U.S. coal exports consist
primarily of Appalachian bituminous coal, especially from West Virginia, Virginia and Kentucky. Coal
imports to the U.S. are insignificant. The proposed rule could encourage additional exports, with a positive
impact on the U.S. balance of trade, if coal from expanded remining in the Appalachian region found
markets overseas. Impacts are difficult to predict, however, since coal exports are determined by economic
conditions in foreign markets and changes in the international exchange rate for the U.S. dollar. Any
impacts on foreign trade are likely to be small, given EPA's expectation that the proposed rule will not
increase overall coal production.
Environmental Impacts and Benefits
Coal Remining Subcategory
Appalachia has been the site of substantial coal mining historically, and much of this mining took place
before passage of laws regulating the environmental impacts of coal mining. The result is an environmental
legacy that includes more than a million of acres of abandoned mine lands. These areas are associated with
a wide range of public health and safety problems and aesthetic degradation, including abandoned mine
openings, highwalls, unstable spoils, and hazardous waterbodies. In addition, acid mine drainage from
abandoned mine lands causes serious water quality problems, and is a major source of water quality
impairments in Appalachia.
EPA evaluated the environmental impacts of remining BMPs on land and water resources using data
from a Pennsylvania study of 112 closed remining sites and another study of 105 Pennsylvania remining
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permits. The 112-site Pennsylvania study found significant decreases or elimination in the levels of specific
pollutants in 38 to 44 percent of the pre-existing discharges monitored. Based on an assumption that
discharges are evenly distributed across reclaimed acres, EPA estimated that 38 percent to 44 percent of
the additional AML acres reclaimed per year will experience significant decreases in pollutant levels. EPA
further assumed that 57 percent of the acres permitted would actually be reclaimed, based on a study of
105 Pennsylvania remining permits (Hawkins, 1995).
EPA was able to quantify some of the benefits expected from increased remining, and was able to monetize
some of the quantified benefits using a benefits transfer approach. Benefits transfer involves use of the
results of previous studies that estimate consumers' willingness to pay for various improvements in
environmental quality. EPA applied willingness to pay values from previous studies of similar
environmental improvements to estimate the value of the environmental improvements expected to result
from the proposed rule. Benefits are estimated by multiplying relevant values from the literature by the
additional acreage reclaimed under the proposed subcategory. EPA assumed that benefits from remining
begin to occur five years after permit issuance and are calculated for a five year period.
Table ES-3 presents EPA's estimates of total annual monetized benefits for the proposed Coal Remining
Subcategory. These estimates include values of enhanced recreational use of water bodies and reclaimed
abandoned mine land, the value of aesthetic improvements to water bodies, and nonuse values associated
with improved water bodies. Nonuse values are assumed to equal one-half of water-related use values.
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Table ES-3: Estimated Benefits for the Proposed Coal Remining Subcategory
Estimated Present Value Estimated Present Value
Annual of Benefits from of Benefits from
Additional Present Remining Permits Remining Permits
Acres AML Value from Issued Each Year Issued Each Year
Benefit Source reclaimed/year1 Literature3 (r=3%)4 (r=7%)4
Recreational Use of
Improved Water Bodies
Aesthetic Improvements
to Water Bodies
Recreational Use of
Reclaimed Land
Nonuse (Improved Water
bodies)
667 to 1,115
667 to 1,115
1,773 to 2,512
667 to 1,115
$37
$140
$100,500 to $168,000
$77,000 to $129,000
$380,000 to $635,500 $292,000 to $488,500
$28 $202,000 to $286,000 $155,000 to $220,000
$19
$51,500 to $86,000
$40,000 to $66,500
Total
$734,000 to $1,175,500
$564,000 to $904,000
1. Assumes that implementation of the rule will result in an additional 3,111 to 4,407 acres of AML permitted for remining per year, that 57% of
those acres are actually reclaimed, and that significant water quality improvements will occur in 38% to 44% of the reclaimed acres.
2. Per acre per year ($1998). See text for literature sources for these values.
5
3. Benefits = /^ \ACF6SF6ClQim6Ct VCllUB] I \\Y + T) \l + D)f ; where r = discount rate and average life of remining operation =
z=0
5 years.
4. Numbers are rounded to the nearest $500.
Annual monetized benefits are estimated to range from approximately $0.70 to $1.2 million using a
discount rate of 3 percent, and between $0.6 and $0.9 million using a discount rate of 7 percent. In
addition to these monetized benefits, EPA estimates that between 216,000 and 307,000 additional feet of
highwall will be removed each year, resulting in significant public safety benefits. Remining may also
reduce drinking water treatment costs; reduce damage to wells, pipes, and other structures; and enhance the
commercial potential of the affected areas. EPA was unable to quantify these benefits in the analysis.
Western Alkaline Coal Mining Subcategory
Affected western mines are located in arid and semiarid regions characterized by very low annual
precipitation. Rainfall occurs generally during localized, high-intensity, short-duration thunderstorms,
with runoff often resulting from flash flooding. Evapotranspiration normally exceeds precipitation.
These conditions create severe soil moisture deficits, limited surface water resources, and poor plant
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growth and cover. Most runoff from undisturbed areas has baseline sediment levels that exceed the 40
CFRpart 434 guidelines for settleable solids.
The exclusive use of sediment ponds to treat runoff from reclamation areas can have detrimental
environmental effects in arid and semiarid regions. Sedimentation ponds create large disturbance areas
which may disrupt fragile habitats and sensitive hydrological features. Sedimentation ponds also reduce
water quantities downstream. Site-specific BMPs have the potential to conserve topsoil, control surface
erosion and sedimentation, increase vegetation density, and minimize disruption of downstream flows.
The WCMWG Model Mine Report compares the performance, costs, and benefits under existing
reclamation requirements to a BMP approach for a model mine typical of surface mines in the
arid/semiarid west. EPA extrapolated the model mine estimates of sediment loadings, runoff delivery
downstream from the reclamation areas, changes in vegetative cover, and size of disturbed area to assess
benefits for the proposed subcategory. EPA used a benefits transfer approach to value two categories of
benefits: land-related benefits and water-related benefits.
The land-related benefits stem from the increased availability of open space, which provides enhanced
hunting opportunities. EPA estimates annual land-related benefits of approximately $5,500 to $36,500 per
year.
Estimated water-related benefits include the value of enhanced recreational opportunities due to improved
water flow. EPA used "willingness to pay" (WTP) values for preserving perennial stream flows sufficient
to support abundant stream side plants, animals and fish from a previous study. EPA applied this WTP
value to the estimated number of water-based recreation participants in western counties where there are
mining operations that affect water bodies with perennial flows. The estimated monetary value of
recreational water-related benefits for these streams ranges from $25,000 to $488,000. EPA assumed that
nonuse benefits were equal to one-half of the water-related recreational benefits, or $12,500 to $244,000
per year.
Total estimated annualized benefits from implementing the proposed subcategory range from $43,000 to
$768,500, as shown in Table ES-4. The benefits estimates do not include a number of benefit categories,
including nonuse ecological benefits, the benefits of increased vegetative cover, and possible recreational
fishing benefits.
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Table ES-4: Estimated Benefits for the Proposed Western Alkaline Coal Mining Subcategory
Benefit Categories
Avoided Surface Disturbance
Recreational Benefits from Improved Water Flow
Nonuse Benefits
Total Benefits
Annual Benefit
Low
$5,500
$25,000
$12,500
$43,000
Values (1998S)1
High
$36,500
$488,000
$244,000
$769,500
'Results have been rounded to the nearest $500.
Social Costs and Benefits
Tables ES-6 and ES-7 summarize the estimated total annual social costs and benefits of the two proposed
subcategories. The estimated social costs include industry compliance costs and the costs incurred by
NPDES permitting authorities to implement the proposed rule. The benefit estimates presented reflect only
those benefit categories that EPA was able to quantify and monetize.
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Table ES-5: Annual Social Costs and Benefits for the Proposed Coal Remining
Subcategory ($1998)
Social Costs (Discounted at 7%):
Compliance Costs:
Additional BMP effort $199,500 - $565,000
Monitoring costs $133,500 - $193,500
Costs to NPDES Permitting Authorities: $47,500 - $67,500
Total Social Costs $380,500 - $825,500
Monetized Benefits (Discounted at 3%):
Recreational Use of Improved Water Bodies $ 100,500 - $ 168,000
Aesthetic Improvements to Water Bodies $380,000 - $635,500
Recreational Use of Reclaimed Land $202,000 - $286,000
Nonuse (related to improved water bodies) $51,500 - $86,000
Total Monetized Benefits: $734,000 - $1,175,500
Note: Totals may not add due to rounding
EPA projects that states will permit 43 to 61 new remining sites each year under the proposed subcategory.
Based on this projection, EPA estimates annual industry compliance costs in the range of $333,000 to
$758,500. This estimate includes potential costs associated with increased BMP effort (i.e., pollution
abatement plan costs) and additional monitoring. Estimated annual costs to NPDES permitting authorities
are between $47,500 and $67,500. The estimated total annual social cost of the proposed subcategory
ranges from $380,500 to $825,500.
The total monetized benefits range from $734,000 to $1,175,500. Between 72 and 76 percent of the total
monetized benefits ($532,000 to $889,500) result from projected improvements to water bodies. Of the
water-related benefits, 71 percent ($380,000 to $635,500) reflects the value of aesthetic improvements to
water bodies, 19 percent ($100,500 to $168,000) reflects water-related recreational benefits, and the
remainder ($51,500 to $86,500) reflects nonuse benefits. Estimated land-related benefits result from
improved recreation on reclaimed lands, including hunting and wildlife-viewing, and account for 24 to 28
percent of the total monetized benefits ($202,000 to $286,000).
In addition to the benefits EPA was able to monetize, the projected increase in remining is expected to
result in the removal of approximately 216,000 to 307,000 feet of highwall each year, resulting in
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substantial benefits associated with increased public safety. Furthermore, increased remining has the
potential to recover and utilize coal resources that might otherwise remain unrecovered. Other benefit
categories that EPA was not able to monetize include health and safety benefits, nonuse benefits related to
reclaimed land, potential savings in drinking water treatment costs, and secondary economic impacts from
increases in tourism and recreation.
The proposed Western Alkaline Coal Mining Subcategory is projected to result in substantial industry cost
savings while creating environmental benefits for society, as summarized in Table ES-6.
Table ES-6: Annual Social Costs, Cost Savings and Benefits for the Proposed
Western Alkaline Coal Mining Subcategory ($1998)
Social Costs (Discounted at 7%):
Compliance Costs (Savings)
Incremental Modeling Costs $327,500
Sediment Control Costs (Savings) ($30,835,000)
Earlier Phase 2 Bond Release ($349,000 - $ 511,500)
(Savings)
Costs to NPDES Permitting Authorities: $ 12,500
Total Social Costs (Savings) ($30,845,000 - $31,00 7,000)
Monetized Benefits (PV at 3%):
Avoided Surface Disturbance $5,500- $36,500
Recreational Benefits from Improved $25,000 - $488,000
Water Flow
Nonuse Benefits $12,500 - $244,000
Total Monetized Benefits: $43,000 -$768,500
Note: Totals may not add due to rounding
EPA believes that the only incremental industry compliance costs attributed to the proposed Subcategory
are associated with the watershed modeling requirements, estimated to be approximately $327,500 per
year. These costs would be offset by reduced sediment control costs associated with implementing the
proposed sediment control plans (an estimated savings of approximately $30.8 million) and savings
resulting from an expected reduction in the reclamation bonding period (an estimated savings of
$349,000 to $511,500). EPA estimates that the annual cost to NPDES permitting authorities to
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implement the proposed subcategory will be approximately $12,500, resulting in a total annual social cost
savings of approximately $31.0 million.
The proposed Western Alkaline Coal Mining Subcategory is also expected to result in environmental
benefits. Total monetized benefits range from $43,000 to $768,500 per year. The majority of the
monetized benefits ($37,500 to $732,000) results from improved water flow that will preserve perennial
water bodies affected by western coal mining operations. The improved flow is expected to result in
benefits to water-based recreation consumers ($25,000 to $488,000), and in water-related nonuse benefits
($12,500 to $244,000). Land-related benefits of $5,500 to $36,500 result from reduced disturbance of
land areas. EPA estimated the value of enhanced hunting opportunities associated with the undisturbed
lands, but was not able to monetize other land-related benefits. Categories of benefits that EPA was not
able to monetize include land-related ecological benefits, the benefits of increased vegetative cover, and
possible recreational fishing benefits.
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Chapter 1
Introduction
1.0 Overview and Definitions
The Federal Water Pollution Control Act Amendments of 1972 established a comprehensive program to
"restore and maintain the chemical, physical, and biological integrity of the Nation's waters" (Section
101(a)). To implement these amendments, the U.S. Environmental Protection Agency (EPA) issues
effluent limitations guidelines and standards for categories of industrial dischargers. The regulations that
the EPA establishes are:
• Best Practicable Control Technology Currently Available (BPT). These rules apply to
existing industrial direct dischargers, and generally cover discharge of conventional
pollutants.
• Best Available Technology Economically Achievable (BAT). These rules apply to
existing industrial direct dischargers and the control of priority and non-conventional
pollutant discharges.
• Best Conventional Pollutant Control Technology (BCT). These rules are an additional
level of control beyond BPT for conventional pollutants.
• Pretreatment Standards for Existing Sources (PSES). These rules apply to existing
indirect dischargers (i.e., facilities whose discharges enter Publicly Owned Treatment
Works, or POTWs). They generally cover discharge of toxic and non-conventional
pollutants that pass through the POTW or interfere with its operation.
• New Source Performance Standards (NSPS). These rules apply to new industrial direct
discharges and cover all pollutant categories.
• Pretreatment Standards for New Sources (PSNS). These rules apply to new indirect
dischargers and generally cover discharge of toxic and non-conventional pollutants that
pass through the POTW or interfere with its operation.
This report presents the economic and environmental impact assessment for proposed amendments to
effluent limitations guidelines and standards for coal mining under the Clean Water Act (40 CFR
part 434). EPA is proposing two new subcategories for coal mining, the first applying to coal remining
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operations and the second applying to reclamation activities at western alkaline coal mines. This report
discusses the two proposed subcategories, provides a brief overview of the coal industry, and describes the
mining operations that will be affected by the proposed rule. The report then presents an analysis of costs,
benefits, economic impacts, and environmental impacts attributed to each of the proposed subcategories.
This report supports EPA's compliance with the following requirements:
• The Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory
Enforcement Fairness Act (SBREFA), which requires, among other things, that the
Agency determine whether a rule will have a "significant impact on a substantial number
of small entities;"
• The Unfunded Mandates Reform Act (UMRA), which requires that the Agency assess the
effects of regulatory actions on state, local and tribal governments and the private sector;
• Executive Order 12866, which requires that the Agency determine whether a regulatory
action is "significant."
1.1 Coal Remining Subcategory
1.1.1 Background
Coal remining is the mining of surface mine lands, underground mine lands, and coal refuse piles that were
abandoned prior to the enactment of the Surface Mining Control and Reclamation Act (SMCRA) in 1977.
Prior to SMCRA, reclamation of mine lands was not a federal requirement. Many coal mines were left in
an abandoned state and continue to degrade the environment and pose health and safety risks. The acid
mine drainage that originates from these abandoned mine lands is considered "pre-existing discharges."
Acid mine drainage from abandoned coal mines is a major environmental problem in the Appalachian and
mid-Continent Coal Regions of the eastern United States. Information gathered from the Interstate Mining
Compact Commission (IMCC) and OSM's Abandoned Mine Land Inventory System (AMLIS) indicates
that there are over 1.1 million acres of abandoned mine lands, over 9,700 miles of streams polluted by acid
mine drainage, and many miles of dangerous embankments, highwalls, and surface impoundments.
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The current 40 CFR part 434 guidelines include numerical limits on pH, iron, manganese and total
suspended solids (TSS). No distinction is made between new coal mining operations and remining
operations, or between pre-existing and new discharges at remining sites. The current regulations create a
disincentive for remining by imposing limitations on pre-existing discharges for which compliance is cost
prohibitive. Congress attempted to address this problem by passing the Rahall Amendment to the Clean
Water Act (CWA) to provide incentives to encourage coal remining. The Rahall Amendment (Section 301
(p)) allows NPDES permit writers to issue permits with site-specific limits for iron, manganese, and pH for
pre-existing discharges at remining sites where remining has the potential to improve water quality. These
modified limits may not exceed baseline levels in the pre-existing discharges, and discharges from the
remining operation may not violate any state water quality standards.
EPA recognizes that one of the most successful means for improvement of abandoned mine land is for coal
mining companies to remine abandoned areas and extract the coal reserves that remain. EPA also
recognizes that if abandoned mine lands are ignored during coal mining of adjacent areas, a time-critical
opportunity for reclaiming the abandoned mine land is lost. During remining operations, acid-forming
materials are removed with the extraction of the coal, pollution abatement best management practices
(BMPs) are implemented under applicable regulatory requirements, and the abandoned mine land is
reclaimed. During remining, many of the problems associated with abandoned mine land (AML), such as
dangerous highwalls, can be corrected without the use of public funds. Furthermore, implementation of
appropriate BMPs during remining operations can be effective at improving the water quality of pre-
existing discharges.
Unfortunately, the potential of the Rahall Amendment to remove the disincentives and derive the maximum
environmental benefits from remining has not been fully realized in the absence of implementing
regulations. The statute does not specify how to determine site-specific limits or baseline pollutant
discharge levels, leaving these decisions to individual permitting authorities. Without standardized
procedures for developing effluent limits for pre-existing discharges, many states with extensive AML
remain hesitant to pursue formal remining programs. EPA is proposing the Coal Remining Subcategory to
provide regulatory guidance to encourage remining activities, and in turn, reduce acid mine drainage and
improve water quality.
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1.1.2 Summary of the Proposed Subcategory
Consistent with the Rahall Amendment, the proposed subcategory will apply only to "pre-existing
discharges" located within pollution abatement areas of coal remining operations and that are not
commingled with wastestreams from active mining activities. All other discharges will continue to be
subject to the current effluent limitations. EPA is proposing a new subcategory with effluent guideline
limitations based on a combination of numeric limits and non-numeric BMP requirements. EPA is also
proposing a standardized procedure for determining pollutant levels for baseline and compliance
monitoring. Potential BMPs include: daylighting abandoned underground mines, removing coal refuse
piles, reducing the volume of acid mine drainage through proper handling of acid-forming materials,
eliminating abandoned highwalls, reconstructing streambeds, draining and backfilling abandoned pits, and
establishing vegetation.
EPA is incorporating BMP standards into the proposal by requiring that remining operators develop and
implement a site-specific pollution abatement plan for each remining site. In many cases, EPA believes
that the requirements for the pollution abatement plan will be satisfied by an approved SMCRA plan.
However, EPA or the State NPDES permitting authority will review the plan and will retain the authority
to recommend additional or incremental BMPs as necessary to meet Clean Water Act requirements.
The proposed effluent limitations guidelines and standards for the Coal Remining Subcategory are
established as follows:
EPA is proposing BPT, BCT, and BAT limitations that have an equivalent technical basis for the
Coal Remining Subcategory. The proposed limitations are defined through a combination of
numeric and non-numeric standards. Specifically, EPA is proposing that BAT is implementation
of a pollution abatement plan that incorporates BMPs designed to improve pH and reduce pollutant
levels of iron and manganese, and a requirement that such pollutant levels are not increased over
baseline conditions. This is essentially the level of treatment currently required under permits
issued in accordance with the Rahall Amendment.
EPA did not consider any regulatory options for new sources for the Coal Remining
Subcategory, and therefore is not proposing NSPS standards. By definition, pre-existing
discharges at abandoned mine lands covered by this proposal were in existence prior to passage
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of SMCRA in 1977. Therefore, all pre-existing discharges are considered existing sources, and are
subject to requirements proposed for BPT, BCT, and BAT.
1.2 Western Alkaline Coal Mining Subcategory
1.2.1 Background
The existing effluent guidelines for reclamation areas establish BPT, BAT, and NSPS numeric effluent
limits based on the use of sedimentation pond technology. The discharge from reclamation areas must meet
effluent limitations for settleable solids and pH. The existing guidelines apply to all reclamation areas
throughout the United States, regardless of climate, topography, or type of drainage (i.e., acid or alkaline).
The existing guidelines establish relatively stringent controls on the amount of sediment that can be
discharged into waterways from post-mined areas. In the arid and semiarid west, use of sedimentation
ponds is generally required to meet these standards. Although sedimentation ponds are proven to be
effective at reducing sediment discharge, EPA believes that there are numerous non-water quality impacts
from their use in the arid and semiarid west that need to be considered.
EPA believes that environmental conditions in the arid and semiarid west differ significantly from those in
other coal mining areas. In arid and semiarid regions, the natural vegetative cover is sparse and rainfall is
commonly received during localized, high-intensity, short-duration storms. These conditions contribute to
flash-floods and turbulent flows that transport large amounts of sediment. Controlling sediment in areas
that naturally contain large amounts of sediment through the predominant use of sedimentation ponds can
result in numerous non-water quality impacts that harm the environment, including disturbing the natural
hydrologic balance, accelerating erosion, reducing groundwater recharge, reducing water availability, and
impacting large areas of land for pond construction. To address these impacts, EPA is proposing a new
subcategory that requires coal mine operators to implement BMPs so that post-mined lands are reclaimed
to mimic natural conditions that were present prior to mining activities.
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1.2.2 Summary of the Proposed Subcategory
In order to maintain natural conditions at reclamation areas, EPA is proposing that non-numeric effluent
limits be based on the design, implementation, and maintenance of best management practices (BMPs).
BMP technologies for the coal mining industry are well known and established. Common BMPs used at
post-mining coal areas include: regrading, revegetation, mulching, check dams, vegetated channels, and
contour terracing, as well as sedimentation ponds.
Specifically, EPA is proposing that a requirement to develop and implement site-specific sediment control
plans apply in lieu of numeric limits for pH and Settleable Solids (SS) required under current guidelines.
EPA is proposing that a mine operator must develop a site-specific sediment control plan for surface
reclamation areas. The sediment control plan must identify BMPs and present design, construction, and
maintenance specifications, and expected performances. The proposed regulations would require the
operator to select BMPs aimed at ensuring that average annual sediment levels in drainage from the
reclamation area would not exceed predicted natural background levels of sediment discharges at that site.
The operator would be required to demonstrate, using watershed models accepted by the regulatory
authority, that implementation of the selected BMPs would meet this goal.
EPA expects that the components of the sediment control plan will largely be satisfied by materials
generated as part of the SMCRA permit application. The SMCRA permit application process requires that
a coal mining operator submit a reclamation plan, documentation and analysis to OSM or the permitting
authority for approval. Based on these requirements, EPA believes that plans developed to comply with
SMCRA requirements will usually fulfill the requirements proposed by EPA for sediment control plans.
The requirement to use modeling techniques is also consistent with OSM reclamation plans. While
modeling is not a required component of the SMCRA permit application, mining facilities already submit a
watershed model as part of their SMCRA reclamation plan. EPA believes modeling is particularly
valuable in arid and semiarid areas where the infrequency of precipitation makes it difficult to gather data.
While EPA is not requiring that a specific model be used, the Agency is proposing to require that the model
be the same watershed model the operator used to acquire the SMCRA permit.
The proposed effluent limitations guidelines and standards for the Western Alkaline Coal Mining
Subcategory are established as follows:
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• EPA is proposing that BPT consist of BMP requirements projected through modeling to maintain
average annual sediment yield at or below pre-mined undisturbed conditions. EPA would require
that the coal mining operator develop and implement a sediment control plan to demonstrate
compliance.
EPA is not proposing numerical effluent limitations for any conventional pollutant and hence need
not propose to establish BCT limitations at this time.
EPA is proposing that BAT standards be established equivalent to BPT.
• EPA is proposing that NSPS standards be established equivalent to BAT and BPT. EPA estimates
that the proposed rule will result in a net cost savings to all affected surface mine operators, and
will be at worst cost-neutral to affected underground operators. Therefore, implementing NSPS
standards will result in no barrier to entry based upon the establishment of this level of control for
new sources.
1.3 Structure of the Report
This report presents EPA's analysis of the costs, benefits, economic impacts and environmental impacts
attributed to the proposed rule. Separate analyses are presented for each of the two proposed
subcategories. Both analyses start with identification of the affected mine operations and characterization
of the economic baseline, and then estimate the incremental industry compliance costs attributed to the
proposed rule. The analyses of the economic impacts of each proposed subcategory include analysis of
potential impacts on coal mine operators, coal markets (coal production and prices), employment, and
small coal mining companies. In addition to these industry impacts, EPA also examined additional
impacts, such as costs to the NPDES permitting authority to implement the proposed standards, community
impacts, and foreign trade impacts.
EPA analyzed the adverse environmental impacts of current practices as a basis for assessing the
incremental environmental impacts and benefits of the proposed rule. These baseline impacts include the
effects of pollution from abandoned mine lands that have not been reclaimed or remined, and the
hydrologic effects and land disturbance caused by predominant use of sedimentation ponds to control
sediment loadings from western alkaline mine reclamation areas. EPA then assessed reductions in these
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baseline adverse environmental impacts that will result from implementation of the proposed rule. EPA
was able to quantify these environmental improvements for some categories of benefits, and estimate their
value using benefits transfer techniques. Benefits transfer involves use of the results of previous studies
that estimate consumers' willingness to pay for various improvements in environmental quality. EPA
applied willingness to pay values from previous studies of similar environmental improvements to estimate
the value of the environmental improvements expected to result from the proposed rule.
The remainder of this report is organized as follows:
Chapter 2 describes the data sources used in the economic and environmental impact
assessment.
Chapter 3 provides a profile of the affected mines and a description of the economic
baseline. The chapter first presents a brief overview of the coal industry in general and
discusses the two subcategories. The regulatory requirements that currently apply to the
affected coal mining operations are then examined. The final section describes how the
economic baselines were characterized for the two subcategories.
• Chapter 4 presents EPA's estimate of the industry compliance costs attributed to the
proposed rule.
Chapter 5 discusses the economic impacts to industry of the proposed rule. This chapter
discusses the potential significance of the economic impacts in general, and analyzes
potential impacts for small entities and new sources in particular.
Chapter 6 presents an evaluation of additional economic impacts, including: costs to the
NPDES permitting authority to implement the proposed standards; impacts on coal
production and prices; community employment impacts; and foreign trade impacts.
Chapter 7 discusses cost-effectiveness.
• Chapter 8 discusses the environmental impacts of the proposed rule, and presents EPA's
analysis of the benefits of the proposed rule.
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Chapter 9 summarizes the social costs and benefits of the proposed rule.
References for all chapters are provided at the end of the main body of the report.
The following appendices support the report:
— Appendix A provides information on current state remining programs.
— Appendix B provides information on the Office of Surface Mining's Abandoned
Mine Lands Program, including the abandoned mine land (AML) fund and the
Abandoned Mine Land Inventory System (AMLIS) database.
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Chapter 2
Data Sources
2.0 Introduction
This chapter describes the data sources used by EPA to support the economic and environmental impact
analyses of the proposed rule. EPA is developing this regulation using an expedited rulemaking process.
As part of the expedited approach, EPA chose not to gather data using the time-consuming approach of a
Clean Water Act Section 308 questionnaire. Therefore, EPA's economic analysis relied on industry profile
information voluntarily provided by stakeholders, on data compiled from individual mining permits, and on
data from publicly available sources. These sources include those that provide data on the coal industry as
a whole, and sources that are specific to the Coal Remining Subcategory or to the Western Alkaline Coal
Mining Subcategory in particular. The categories of sources are described in separate sections below.
2.1 General Industry Sources
2.1.1 DOE/EIA Coal Data (Form 7A)
The Department of Energy's Energy Information Administration (DOE/EIA) collects and reports a wide
range of energy-related information, including information on coal production and use. These include
data collected from coal producers using EIA Form 7A, which must be completed by all coal mining
companies that own a mining operation that produced, processed or prepared coal during the reporting
year. Data are reported separately for each mining operation. However, most of the data are reported
only by mines producing 10,000 short tons per year or more of coal. This form collects a variety of
information on mining operations, including type of mine, mining methods, coal beds mined, recoverable
reserves, coal production, quantity and value of sales, employment and productivity. Summaries and
analyses of these data for!997 are reported in DOE/EIA's Coal Annual 1997. In addition, some data are
available publicly in electronic form from the DOE/EIA website.1 The publically-available data include
'httpV/www.eia.doe/cneaf/coal/data/summary/files.html
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identifying information for the coal company and mine (name and location), type of mine, state and Mine
Safety and Health Administration (MSHA) permit numbers, mine type (underground, strip, auger,
strip/auger combination, etc.), type of operator (independent, operating subsidiary, or contractor), location
on federal property, and coal production for the reporting year. The DOE/EIA data were used to prepare
the profile of western surface and underground mines, as well as to provide basic industry information on
prices, production and employment needed to assess the economic impacts of the proposed rule.
2.1.2 Keystone Coal Industry Manual
The 1998 Keystone Coal Industry Manual provided information on the ownership and production of
individual mines, as well as background information on industry conditions from the Coal Age Year in
Review summary (e.g., information on acquisitions and company sales, and recent regional trends in
production).
2.1.3 Census Data
Census data summarized in the Statistics of U.S. Businesses were used to assess the size of firms that own
coal mining operations. The 7992 Census of Mineral Industries provided information on revenues, costs
and employment by size of establishment (mine).
2.1.4 Financial Data
EPA used the Security and Exchange Commission's (SEC) Edgar database, which provides access to
various filings by publicly held firms, such as 8Ks and lOKs, for financial data and information on
corporate structures. EPA also used a database maintained by Dun & Bradstreet (D&B), which provides
estimates of employment and revenue for many privately held firms, and obtained industry financial
performance data from Leo Troy's Almanac of Business and Industrial Financial Ratios.
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2.2 Sources for Coal Remining Subcategory
Various databases were used to characterize abandoned mine lands that are potential candidates for
remining, and to characterize past and potential future remining sites. These databases are described
below.
2.2.1 AMLIS Database
The Abandoned Mine Land Inventory System (AMLIS) database (U.S. DOI ,1998b) characterizes the
extent of environmental problems associated with AML in the United States. The database, which provides
an inventory of water bodies and lands impacted by abandoned coal mining sites, is maintained by the
Office of Surface Mining (OSM) to provide information needed to implement the Surface Mining Control
and Reclamation Act of 1977 (SMCRA). The AMLIS database is a dynamic system that is continuously
updated by OSM program officials, states, and tribes with field survey data.
The AMLIS data are presented in two different tables. One table presents basic information about problem
areas, and the other defines specific problem types that exist within problem areas. The first "problem
area" table gives a general count of problem areas and contains information such as ownership, mine type,
and location. Overall, there are 14,852 problem areas in the AMLIS database as of February, 1999. Of
these, 7,966 problem areas (accounting for 368,804 acres) are former coal mining sites that have not been
funded for reclamation. The second table collects data on the specific types of problems and problem size
(e.g., feet of abandoned highwall, counts of mine openings), as well as estimated reclamation costs. Each
problem type is reported only once for each area. Therefore, the feet reported for abandoned highwall at a
given area, for example, represents the total footage of all highwall at that area. (Definitions of the AMLIS
problem types are provided in Appendix B.) In total, there are 18,426 problems that have not yet been
funded for reclamation at coal-related sites.2
2.2.2 NALIS Database
The National Abandoned Land Information System (NALIS) database is maintained by the Pennsylvania
Department of Environmental Protection (PA DEP, 1999b) and supplements the AMLIS data for the
2The AMLIS data analysis excluded problem areas that did not have a problem type reported.
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Commonwealth. EPA used NALIS data available as of March 1999 in the economic analyses. NALIS
includes 5,488 problem areas identified from high altitude aerial photography as resembling mine lands.
Data available for each problem area include location, ownership, and whether an active mine drainage
permit may apply to the problem area. From these 5,488 problem areas, Pennsylvania selected 2,218
problem areas that might qualify for federal funding and gathered data on these areas using the Inventory
Update Form. The Inventory Update Form includes data on:
Location and total acres of problem area;
Reclamation costs;
• Mine type;
• Type and quantity of priority 1 and 2 problems;
Type and size of priority 3 problems;
Injury/death, accident, or property damage reports;
• Problem area visibility status;
• Extent of public access; and
Number of people directly affected by problem area.
The NALIS database provides more comprehensive information on Pennsylvania AML than does AMLIS.
NALIS includes 2,218 problem areas, slightly more than the 2,095 problem areas included in AMLIS that
actually meet the standards for federal funding in Pennsylvania. However, there are 6,055 problem types
reported in NALIS for Pennsylvania, compared with 4,022 problem types reported for the Commonwealth
in AMLIS. The following data are reported for each problem type:
Funding source;
• Problem and mine type;
• Height or depth of mine lands;
Volume or flow of water; and
Miles of streams polluted by a given discharge.
2.2.3 EPA Coal Remining Database
EPA's Coal Remining Database (U.S. EPA, 1999a) includes information on remining and AML
reclamation operations for selected sites in six Appalachian states (WV, VA, PA, AL, KY, and TN).
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EPA compiled the database from existing state data packages. The database contains the following
information:
Mine permit data;
• Mine location;
• Affected acres;
• Discharge and water quality data;
Mine geology; and
• Information on abatement techniques (BMPs).
As of December 1998, the database contains information on 62 Appalachian mine sites, 19 of which are
located in Pennsylvania.3 Information is also provided for Alabama, Kentucky, Tennessee, Virginia and
West Virginia sites. Three of the sites were not included in the economic impact analysis, because they
involved only reclamation and not remining as defined by the proposed rule. Of the 59 permits included in
the analysis, the Commonwealth of Pennsylvania has the largest number of records (18), followed by
Alabama (16), West Virginia (9), Virginia (8), and Kentucky and Tennessee (both with 4).
2.2.4 Interstate Mining Compact Commission Solicitation
The Interstate Mining Compact Commission (IMCC, 1999) obtained information on current remining
activities and potential future remining from state agencies. As of July 1999, twenty states had
responded to the IMCC solicitation (Alaska, Alabama, Colorado, Illinois, Indiana, Kentucky, Maryland,
Missouri, Mississippi, Montana, North Dakota, New Mexico, Ohio, Pennsylvania, Tennessee, Texas,
Utah, Virginia, West Virginia and Wyoming). The data provided include types of remining permits
issued (e.g., Rahall, non-Rahall), characteristics of current and potential future remining operations (e.g.,
numbers of abandoned coal refuse piles, surface mined and underground mined sites), types of best
management practices (BMPs) used and assessments of their success, stream miles impacted by acid
mine drainage (AMD), and industry profile statistics. The industry profile data include numbers of
companies holding remining permits, total employment at remining operations, annual coal production
from remining sites, and estimated coal reserves that could be remined. The IMCC data were used to
3Note that of the 19 Pennsylvania mines included in the database, only 9 matched with problem
areas in NALIS. NALIS and EPA's Coal Remining Database are not directly comparable, since EPA's
database reports on specific mine sites and NALIS reports on problem areas.
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estimate the number of potential future remining sites and to supplement information provided in EPA's
Coal Remining Database.
2.2.5 Total Maximum Daily Load Tracking System
The Total Maximum Daily Load (TMDL) Tracking System (U.S. EPA, 1996) was used to characterize the
environmental impacts of AML. The database provides information collected under Section 303(d) of the
Clean Water Act (CWA) on waters that do not currently support designated uses. Section 303(d) requires
states to identify such waters and to develop TMDLs for them. The tracking system combines all final
1996 303(d) lists from all states into a common database. Because the data were compiled at the state
level, information is not always reported in the same format and some data fields are incomplete. This
database contains information on water body type, size of impaired water body, and cause of the
impairment. Water quality impairments that are likely to be caused by AMD from coal mines were
variously reported as caused by: AMD, AML discharge, mining operations, mining, or resource extraction.
TMDL information was used to identify water bodies impaired by coal mining activities in individual
states. To the extent possible, EPA excluded extraction of mineral resources other than coal from the
relevant causes of water quality impairment. Nevertheless, the assessment of water quality impairment is
likely to include adverse effects on water quality from resource extraction activities other than coal and
pollutants other than those found in AMD.
2.2.6 EPA Region III CIS Database
EPA's Region III office in Wheeling, West Virginia compiled a Geographic Information System (GIS)
database of streams with fisheries impacted by acid mine drainage in 1995 (U.S. EPA, 1995). This EPA
database defined two levels of impact: streams with severe impacts were characterized as "no fish" by state
fisheries biologists; and streams with less severe impacts were denoted "some fish," where acid mine
drainage had reduced the number of species or reduced productivity. These data cover all six states (PA,
WV, VA, MD, OH and DE) in EPA Region III. Three of these states (PA, WV, and VA) are also included
in EPA's Coal Remining Database. EPA used the Region III database to estimate the number of streams
with fisheries impacted by acid mine drainage in each state.
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2.2.7 Pennsylvania's 112 Remining Site Study
A study of 112 closed remining sites prepared by the Pennsylvania Department of Environmental
Protection evaluated the impact of remining on the water quality of pre-existing and post-remining
discharges (PA DEP, 1999a). The study was used to estimate the average number of pre-existing
discharges per remining site and to assess the impact of remining on pollutant levels in the discharges.
2.3 Sources for Western Alkaline Coal Mining Subcategory
EPA worked with a Western Coal Mining Work Group (WCMWG) composed of representatives from the
Office of Surface Mining (OSM), the Western Interstate Energy Board (WIEB), State regulatory
authorities, the National Mining Association (NMA), and other stakeholders to identify, compile and
analyze existing information and data. NMA supplied EPA with a number of reports supporting the need
for, and feasibility of, establishing a separate Western Alkaline Coal Mining Subcategory. The group
provided three overall types of information relevant to this report.
2.3.1 Profile of Affected Coal Mining Operations
The WCMWG provided industry profile information on western alkaline surface and underground coal
mines believed to be in the scope of the proposed rule (WCMWG, 1999b). These data included
information on:
• Mine name and location;
• Date when the mining operation began;
Annual coal production (1,000 tons);
• Average value of coal sold by all reporting mines in the state in which the mines are
located ($/ton);
• Mining permit information including permit number and the issuance date;
Whether the mine is located on Indian Tribal lands;
• Number of acres disturbed to date by the mining operation;
• Projected additional acres disturbed over the lifetime of each mine;
• Projected mine life;
Bond amount; and
• Name and characteristics of the receiving waters.
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The information was compiled from DOE/EIA data, the Keystone Manual, and data from current permits
for individual mines.
2.3.2 Model Mine Analysis
The work group also supplied EPA with a mine modeling study sponsored by the National Mining
Association and reviewed by OSM (WCMWG, 1999a). The study presents a comprehensive analysis
comparing the predicted performance, costs and benefits of current 40 CFR part 434 Guidelines to the
requirements for the proposed subcategory for a representative model mine in the arid and semiarid western
coal region. Characterization of background water quality, soil loss rates, and sediment yield were
predicted using computer models for both pre-mining (undisturbed) and post-mining (reclamation)
conditions. The model cost estimates of the two reclamation systems relied on cost data taken from case
study mine permit applications, mine records, technical resources and industry experience. The study
estimated capital costs (design, construction and removal of ponds and BMPs) and operating costs
(inspection, maintenance, and operation) over the anticipated bonding period. Cost savings result both
from lower capital and operating costs associated with the BMP systems and from an expected reduction in
the bonding period during which the reclamation costs will be incurred. The calculations assume that the
post-mining Phase II bond release period is 10 years under the current effluent guidelines and that Phase II
bond release could occur in five years under the proposed subcategory. The cost model is discussed in
detail in Development Document for Proposed Effluent Limitations Guidelines and Standards for the
Western Alkaline Coal Mining Subcategory (U.S. EPA, 2000c).
2.3.3. Information on Environmental Impacts
The WCMWG provided information on the environmental impacts of reclamation practices at western
alkaline mines, including the impacts of sedimentation ponds and various sediment control BMPs, in the
following formats:
Paired watershed studies, which assess water quantity and quality impacts of different
types of sediment controls.
-------
Technical Information Package: Western Alkaline Mining Subcategory (WCMWG,
1999c). This package provides an overview of the environmental characteristics of
western alkaline mines, a description of the current BMPs and alternate sediment control
technologies (ASCTs) to control sediment runoff, and a discussion of potential
environmental impacts from different types of BMPs, based on a variety of sources.
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Chapter 3
Industry Profile and Economic Baseline
3.0 Introduction
This chapter describes the foundation of the economic impact analysis of the proposed rule. The chapter
begins with a brief overview of the U.S. coal mining industry. This section discusses industry profile data,
market characteristics, and recent trends in coal mine production and employment. The chapter then
describes the current regulatory requirements that apply to coal mining operations that are affected by the
proposed rule, including existing effluent guidelines, SMCRA requirements, the Rahall Amendment to the
Clean Water Act, and state remining programs. Finally, the chapter describes how the economic baselines
were characterized for the two coal mining industry segments that will be affected by the proposed rule.
EPA's estimates of the number and acreage of new remining sites that will be permitted each year under the
proposed Coal Remining Subcategory are presented, and the western alkaline coal mines that are
considered in the economic impact analysis for the Western Alkaline Coal Mining Subcategory are
discussed.
3.1 Overview of the Coal Industry
The United States produces approximately one-fourth of the world's coal, and is the second largest national
holder of coal reserves. Estimated recoverable reserves in the U.S. equal more than 250 years' supply at
today's production levels. The U.S. coal industry has undergone substantial streamlining and restructuring
in recent years in an attempt to remain profitable, including a dramatic reduction in the number of mines,
increases in mining productivity and the average size of mines, regional shifts in production, and
consolidation in ownership (DRI, 1998).
Coal is mined from several distinct regions and provinces in the United States, which differ significantly in
both their economic and environmental characteristics. The major regions include:
• Appalachian: Alabama, Georgia, Eastern Kentucky, Maryland, Ohio, Pennsylvania,
Tennessee, Virginia, and West Virginia;
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• Interior: Arkansas, Illinois, Indiana, Iowa, Kansas, Western Kentucky, Louisiana,
Missouri, Oklahoma and Texas;
Western: Alaska, Arizona, California, Colorado, Montana, New Mexico, North Dakota,
Utah, Washington, and Wyoming.
Historically, the Appalachian Region has been the Nation's most important source of coal, accounting for
about three-fourths of the annual production as recently as 1970.4 However, its share of total U.S.
production has been declining steadily since that time. A major consolidation and a shift in production
from eastern to western coal mines has occurred over the last 10 years. There has been a significant
reduction in the total number of coal operations since 1988, with the sharpest reduction occurring in the
Appalachian region. From 1988 to 1997, the number of coal mine operations decreased by:
• 54 percent in the Appalachian Region, falling from 3,469 mines to 1,602 mines;
• 46 percent in the Interior Region, dropping from 277 mines to 149 mines; and
• 32 percent in the Western Region, decreasing from 114 mines to 77 mines.
While the number of mines has decreased since 1988, total U.S. coal production has increased over the
same period. Production has increased in the Appalachian Region by four percent, declined in the Interior
Region by almost twelve percent, and increased by over 46 percent in the Western Region. By 1997,
western production was almost equal to total production from the Appalachian Region ~ the United States
produced 1.09 billion short tons of coal, with the Appalachian Region producing approximately 468 million
short tons, the Interior Region producing approximately 172 million short tons, and the Western Region
producing approximately 451 million short tons.
Employment in coal mining has shown a long-term decline, despite the increase in coal production. This
decline in employment reflects the replacement of manual labor by machines in virtually all aspects of
mining. Overall coal employment has declined from approximately 229,000 in 1980 to less than 82,000
in 1997. Employment reductions have been the greatest in Appalachia, where employment has fallen
from 171,000 in 1980 to less than 55,000 in 1997. Despite the decline, coal mining employment is still
substantially higher in Appalachia than in other regions, due to the use of more labor-intensive
4DOE/EIA, 1995. Information in the remainder of this section is taken from DOE/EIA, 1995;
DOE/EIA, 1997; and DOE/EIA, 1999.
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underground mining methods. Appalachian, Interior and Western mining accounted for 72, 16 and 12
percent of 1997 coal mining employment, respectively.
3.1.1 Coal Remining
IMCC member states have estimated that there are currently 150 mining companies in ten states involved in
remining operations (under either Rahall-type permits or current 40 CFR 434 limitations). These
companies are producing approximately 25 millions tons of coal annually, and are employing
approximately 3,000 people. To date, approximately 1,072 permits that include coal remining operations
have been issued. Of these, 330 (31 percent) are Rahall-type permits where the operator is required to meet
determined baseline limits for pre-existing discharges. Seven states have established formal remining
programs, and combined have issued approximately 330 Rahall permits. The vast majority of these,
approximately 300, were issued by the Commonwealth of Pennsylvania. Of the remaining thirty, ten were
issued by Alabama, eight by West Virginia, four by Kentucky, three by Virginia, three by Ohio, and two by
Maryland.
Remining operations currently underway have proven to be a viable means of remediating the
environmental conditions associated with abandoned mine lands without imposing a significant cost burden
to industry. Remining operations are affecting approximately 270 abandoned coal refuse piles, 1,600
abandoned surface mines, and 1,100 abandoned underground mines. Information provided by IMCC
indicates that there are approximately 2,100 coal refuse piles, 2,000 abandoned surface mines (plus
228,000 acres), and over 8,000 abandoned underground mines that have the potential for remining.
3.1.2 Western Alkaline Coal Mining
This section describes the subset of coal mines that would be eligible for the proposed Western Alkaline
Coal Mining Subcategory. These are mines west of the 100th meridian, located in areas with 26 inches or
less annual precipitation, and in arid or semiarid environments. States in the coal-bearing zones of the
West are: Arizona, Colorado, Utah, Montana, New Mexico, Wyoming, and portions of North Dakota.
Coal mines in the western alkaline region represented only 3.7 percent of U.S. coal mines in 1997, but
accounted for 38 percent of total coal production.
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EPA prepared the document Coal Remining and Western Alkaline Mining: Economic and Environmental
Profile (U.S. EPA, 1999e) in support of the proposed rule. The report provides industry profile
information on the 47 surface coal mines and 24 underground coal mines initially believed to be in the
scope of the proposed subcategory.5 Future reclamation at these existing mines, as well as reclamation at
new western alkaline mining operations, will be eligible for the proposed subcategory. Forty-two of the
surface mines report positive coal production, totaling 502.6 million tons with an estimated value of $4.4
billion in 1996-97. Four of these (producing 26.5 million tons) were located on Indian Tribal land,
including two mines on Navajo land and two mines on both Navajo and Hopi land. DOE/EIA data on the
24 existing underground mines show that they produced 47.4 million tons of coal in 1997. Most of the
firms operating coal mines in the western arid/semiarid region are large, as defined by the Small Business
Administration (those with 500 employees or less). Based on Dun & Bradstreet information on parent firm
employment, only three of the surface mines and three of the underground mines are owned by small firms.6
3.2 Current Regulatory Requirements
This section describes the relevant state and federal requirements that currently apply to coal mine
operators affected by the proposed rule. This description provides the basis for determining how the
proposed rule will change compliance requirements, resulting in the costs, cost savings, environmental
benefits, and economic impacts that are estimated in subsequent chapters.
3.2.1 Current Effluent Guidelines
Discharges from coal mines are regulated as point sources under the Federal National Pollutant
Discharge Elimination System (NPDES), established under Section 402 of the Federal Clean Water Act.
EPA promulgated the effluent limitations guidelines and standards that are in effect today for coal
mining under 40 CFR part 434 on October 9, 1985 (50 FR 41296). Currently, there are four
subcategories, including: Coal Preparation Plants and Coal Preparation Plant Associated Areas, Acid or
5EPA later determined that one of the surface mines profiled was already in the final reclamation
stage and would not be affected by the proposed rule; hence, only the remaining 46 surface mines were
included in the analyses of costs and benefits.
6Five surface mines and eight underground mines could not be classified by size of parent firm.
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Ferruginous Mine Drainage, Alkaline Mine Drainage, and Post-Mining Areas, along with a subpart for
Miscellaneous Provisions.
Under the existing rule, a remining operation is defined as a new source coal mine. No distinction is made
between new coal mining operations and remining operations, or between pre-existing and new discharges
at remining sites. Hence, the effluent limitations set by NPDES permit writers for all discharges at
remining operations must be at least as stringent as the federal new source performance standards (NSPS)
at 40 CFR part 434. The guidelines include numerical limits on iron (total), manganese (total), pH, and
total suspended solids (TSS).
The existing regulations for post-mining areas (subpart E) apply to all reclamation areas throughout the
United States, regardless of climate, topography, or type of drainage (i.e., acid or alkaline). Hence, the
effluent limitations set by NPDES permit writers for discharges from reclamation areas at western coal
mines must be at least as stringent as the federal BPT, BAT, and NSPS limitations at 40 CFR part 434.
The guidelines include numerical limits for settleable solids and pH, at 0.5 ml/L and 6 to 9 units
respectively.
3.2.2 SMCRA
The Surface Mining Control and Reclamation Act passed in 1977 established programs to control the
negative environmental impacts of surface coal mining. SMCRA created the Office of Surface Mining
Reclamation and Enforcement in the Department of Interior, and provided for two major programs. The
first establishes standards and procedures to prevent environmental degradation from active coal mining
and reclamation operations, both surface and underground. The second is a reclamation program for
abandoned mine lands, funded by fees on coal production, to reclaim land and water resources adversely
affected by pre-1977 coal mining and not adequately reclaimed. OSM has promulgated comprehensive
regulations to control surface coal mining and the surface effects of underground coal mining at 30 CFR
parts 700 et seq.
SMCRA requires that mine operators obtain mining permits from OSM or a delegated state agency.
The existing permitting process under SMCRA is a site-specific process requiring baseline data to describe
the quality and quantity of both the affected ground and surface water. To be eligible, a permit must be
dated on or after August 4, 1977 and must be accompanied by a reclamation plan. To be approved, the
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proposed surface mining operation must not further degrade any surface or ground water basins, and the
affected area must be capable of being reclaimed. If the mining permit is approved, the mining operators
must adhere to a number of OSM performance standards, and must accept all potential environmental
liabilities associated with the site, such as AMD and public health risks. The SMCRA rules also reference
existing water quality laws and existing federal or state programs to regulate effluent discharges.
Mining operators must post a performance bond payable to the federal government or the state, in an
amount sufficient to assure the completion of the reclamation plan if the work has to be completed by the
governing agency. The bond can only be fully released after the regulatory authority certifies that all
performance standards have been met and full reclamation of the site has occurred. Such a determination is
generally not made until the mine operation has been completed for five years in the east and midwest
regions, and 10 years in the western region. However, the bond can be partially released at various stages
(as discussed in Chapter 4) if the reclamation plans are being met on schedule.
Prior to the 1977 promulgation of SMCRA, some operators remined abandoned mine land because they
were held to less restrictive environmental standards given the already-poor environmental conditions at the
sites (Veil, 1993). In the process of remining, safety, aesthetics, and water quality conditions were often
improved. After passage of SMCRA, much of the remining of the most degraded areas ceased, because
SMCRA shifted total liability for environmental impacts to the present operator of the site, regardless of
past practices. Operators were reluctant to accept liability, particularly for water quality requirements, and
instead mined virgin sites or sites without pre-existing discharges.
A number of amendments and changes to the SMCRA permitting program have been adopted to encourage
more remining of AML. federal SMCRA regulations include less restrictive standards for remining
operations regarding topsoil, revegetation, and backfilling and grading. In addition, the Small Operator
Assistance Program (SOAP) (30 CFR 795) provides assistance to eligible small coal mine operators,
including remining operators, by providing funding for site evaluations required to obtain a permit.
Operators are eligible if they intend to apply for a permit under SMCRA, and can demonstrate that the
probable total attributed annual production for all locations on which they are issued a surface coal mining
and reclamation permit will not exceed 300,000 tons. States are granted the authority to use alternate
criteria for determining operator eligibility so long as the grant request does not exceed the amount that
would be authorized under the federal SOAP provisions.
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3.2.3 The Rahall Amendment
The Clean Water Act was amended by the Water Quality Act of 1987. The amendments added Section
301(p), commonly referred to as the Rahall Amendment, to provide incentives to encourage coal remining.
The Rahall Amendment allows the NPDES permit writers to issue permits with site-specific limits for iron,
manganese, and pH for pre-existing discharges at remining sites where remining has the potential to
improve water quality. Technology-based limits for these pollutants are based on "best professional
judgement" (BPJ). These modified limits may not exceed baseline levels in the pre-existing discharges, and
discharges from the remining operation may not violate any state water quality standards.
To date, EPA has not established regulations or guidance implementing the Rahall Amendment. The
proposed Coal Remining Subcategory will establish specific requirements for eligible sites consistent with
the Rahall Amendment provisions.
3.2.4 State Remining Permit Programs
Many states have been delegated authority under SMCRA and the NPDES program, and several states
have established or are developing remining programs. State remining permit terms and conditions must
follow provisions established in the SMCRA regulations, except where these provisions are modified by the
state and approved by the Secretary of the Interior. The IMCC solicitation collected information on twenty
states' remining programs (IMCC, 1999). As of July 1999, seven of the twenty states responding
(Alabama, Kentucky, Maryland, Ohio, Pennsylvania, Virginia and West Virginia) had issued Rahall
permits, and another four states (Illinois, Indiana, Missouri, and Tennessee) had issued non-Rahall
remining permits. Pennsylvania had issued by far the greatest number of Rahall permits (300), followed by
Alabama (10).
Pennsylvania has a particularly active remining program. Pennsylvania has standardized requirements for
remining permits, and provides for a single application that covers both SMCRA and NPDES
requirements. Pennsylvania establishes BPJ limits for iron, manganese, and acidity for pre-existing
discharges under remining regulations that were approved by OSM and EPA in March 1986. Bond
release is contingent on the post-mining discharge having pollutant levels equal to, or less than, the pre-
remining baseline. Vegetation must be restored to pre-remining levels as well. Applicants must provide
data on baseline water quality and quantity sufficient to characterize baseline pollutant levels, and must
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develop a pollution abatement plan that is integrated with the mining and reclamation plan. Appendix A
provides additional information on state remining programs.
3.3 Characterizing the Economic Baseline
3.3.1 Coal Remining
EPA estimated economic baseline conditions based on existing state and federal regulations and current
industry practices. For remining, EPA assumed economic baseline conditions to be remining under a
Rahall permit, pursuant to Section 301(p), rather than comparing to compliance with current part 434
regulations. The Agency relied on information provided by the states on the number and acreage of AML
sites that are potential candidates for remining, as well as information on Pennsylvania's experience with
permitting under its active remining program, to estimate the number of new remining sites with pre-
existing discharges that might be permitted each year under the proposed subcategory.
Specifically, this estimate was based on states' responses to the IMCC survey, which included a request for
information on the number of potential remining sites in three categories: coal refuse piles, surface mined
sites, and underground mined sites. Table 3-1 provides EPA's estimates of potential remining operations
per state (U.S. EPA, 1999b).
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Table 3-1: Potential Remining Operations by State
State
AL
IL
IN
KY
MD
OH
PA
TN
VA
WV
Totals
Number of Coal Refuse
Piles
1
30
150
200
10
219*
858
36*
400-450
~
1,900
Number of Surface
Mined Sites
~
10
453
400-600
75
605*
4,183*
1,210*
750
o
J
7,790
Number of
Underground Mined
Sites
~
12
615
800-1,000
75
4,000
831*
800
800
~
8,000
* denotes numbers calculated by EPA based on state estimate of potential remining acres
- = no response
Source: U.S. EPA, 1999b.
In order to evaluate how many remining permits would be issued annually due to the proposed subcategory,
EPA evaluated the number of remining permits issued in Pennsylvania following state implementation of a
regulation that is similar to the proposed remining rule. EPA believes that implementing the proposed rule
is likely to have a similar effect on other states with remineable coal reserves and similar acid mine
drainage problems. In an average year, Pennsylvania issued permits to 0.36% of the potential remining
sites in the Commonwealth, with a maximum of 0.51% being issued in 1990. Therefore, EPA calculated
the number of sites potentially affected by assuming that each state would issue permits to 0.36% to 0.51%
of their reported potential remining sites on an annual basis. Table 3-2 presents these estimates.
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Table 3-2: Estimated Remining Operations Permitted Annually
Coal Refuse Piles
Alabama
Illinois
Indiana
Kentucky
Maryland
Ohio
Pennsylvania
Tennessee
Virginia
West Virginia
Total Sites
Permitted Each
Year
#
0
0
1
1
0
1
3 -4
0
2
0
7-10
acres
0
1
3 -4
4-5
0
4-6
15-22
1
8-11
0
35-49
Surface
#
0
0
2
2-3
0
2-3
15-21
4-6
3-4
0
28-40
Mined Sites
acres
0
1-2
62-88
68-97
10- 15
83-117
572-811
166-235
103-145
0-1
1,066-1,510
Underground Mined
Sites
#
0
0
2-3
3-5
0
14-20
3 -4
3-4
3-4
0
29-41
acres
0
2
84- 119
123 - 174
10- 15
2,160-3,060
114-161
109-155
109-155
0
2,712-3,840
Source: U.S. EPA, 1999b.
Entries may not sum to totals due to rounding.
Although EPA estimated that the Coal Remining Subcategory would be applicable to 64 to 91 remining
sites and 3,810 to 5,400 acres annually, EPA projects that fewer sites would realize costs or benefits from
the proposed rule. The Commonwealth of Pennsylvania has an advanced remining program, and EPA does
not believe that the proposed rule will have a measurable impact on Pennsylvania's remining activities.
Therefore, EPA did not include Pennsylvania's remining sites in the estimation of costs or benefits. EPA's
cost and benefit analysis were based on atotal of 43 to 61 sites representing 3,100 to 4,400 permitted acres
each year. EPA assumed that 57 percent of the acres permitted (1,800 to 2,500 acres) would actually be
reclaimed each year based on a study of 105 remining remining permits in Pennsylvania (Hawkins, 1995).
The study found that on average, a remining site had 67 AML acres, of which 38 acres (or 57 percent),
were actually reclaimed. Table 3-3 shows the various estimates EPA used in the economic and
environmental impact analysis.
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Table 3-3: Annual Estimates of Affected Remining Sites Used in
Economic and Environmental Impact Analysis
the
Additional Sites Permitted Number of Sites
Acres
Used in Analysis of:
All types, all states
(initial estimate)
64-91
3,812-5,401
All types, excluding PA
43 -61
3,111 -4,407
Monitoring costs for selected
states; NPDES permitting
authority costs
10% of surface & under-
ground sites only (no coal
refuse piles), excluding PA
3.9-5.6
309-438
Costs of additional BMPs
Additional acres reclaimed:
(57% of acres permitted, all
types excluding PA)
1,773 -2,512
Benefits from recreational use
of reclaimed land
Additional acres reclaimed
expected to have significant
decreases in AMD pollutant
levels (37.6 - 44.4% of
additional reclaimed acres)
667-1,115
Benefits from recreational use
of improved water bodies;
Aesthetic improvements in
water bodies; Nonuse benefits
As discussed in Chapter 8, EPA evaluated evidence on the impacts of remining on water quality and on
various hazards posed by abandoned mine lands to estimate environmental impacts of the proposed
subcategory. This analysis included a detailed review of BMP performance, loadings and water quality
impacts for a sample of remining sites, as well as review of other literature on the impacts of remining.
Based on this evidence, the Agency was able to quantify and monetize some of the benefits of additional
remining induced by the proposed subcategory using a benefits transfer approach. The Agency was not
able to quantify other important potential benefits of the rule, however, including human health and safety
impacts.
3.3.2 Western Alkaline Coal Mining
EPA prepared the document Coal Remining and Western Alkaline Mining: Economic and Environmental
Profile (U.S. EPA, 1999e) in support of the proposed rule. The report provides industry profile
information on the 47 surface coal mines and 24 underground coal mines initially believed to be in the
scope of the proposed subcategory. However, EPA determined that one of the surface mines profiled
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was already in the final reclamation stage and would not be affected by the proposed rule; hence, only the
46 remaining surface mines were included in the analyses of costs and benefits.
As discussed in Chapter 4, EPA believes that the only incremental cost attributed to the proposed
subcategory is associated with watershed modeling requirements. Information provided by the Office of
Surface Mining indicates that a typical underground operator would not incur any additional modeling
costs as a result of the proposed rule due to the small acreage and lack of complexity associated with these
reclamation areas (U.S. DOI, 1999a, 1999b). EPA projects that cost savings for this subcategory would
result from lower capital and operating costs associated with implementing the proposed BMP plans, and
from an expected reduction in the reclamation bonding period. The methodologies used to estimate the
costs and cost saving are discussed in Chapter 4.
Although EPA believes that compliance with the proposed rule would result in operational savings for
many underground producers, EPA did not estimate the savings due to data limitations. The industry
profile data submitted by the WCMWG did not provide information on disturbance acreage, mine life, or
bond amounts for the underground mines, and the model mine analysis addressed conditions typical of
surface mines rather than underground mines. It was therefore not possible to estimate cost savings
associated with the proposed subcategory for reclamation of surface areas at underground mines.
However, any savings are likely to be small given the limited acreage and lack of complexity associated
with these reclamation areas. Hence, EPA assumes that the proposed rule would be cost-neutral for the
underground operators. The remainder of this report considers only the 46 active surface mines in its
discussion.
The WCMWG model mine analysis on comparative sediment loadings, as well as other evidence from the
literature, supported EPA's analysis of the environmental impacts of the proposed subcategory.
EPA developed a partial monetary estimate of expected benefits attributed to the proposed regulation for
two categories: land-related benefits and water-related benefits. The estimated water-related benefits
include the value of enhanced recreational opportunities from improved water flow conditions. The land-
related benefits result from reduced land disturbance due to the reduced use of sedimentation ponds. The
benefits estimates do not include a number of benefit categories, including nonuse ecological benefits.
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Chapter 4
Industry Compliance Costs
4.0 Introduction
This chapter presents EPA's analysis of the costs and cost savings to the coal mining industry attributed to
the proposed rule. These are the changes in compliance costs associated with differences between current
requirements and requirements under the proposed subcategories.
EPA estimated compliance costs for two additional requirements associated with the proposed Coal
Remining Subcategory: (1) monitoring costs; and (2) pollution abatement plan costs. The Agency
evaluated current state requirements for operations permitted under the Rahall provision and calculated the
proposed sample collection costs that exceed the current state requirements based on estimates of typical
sampling, analysis and monitoring device costs. EPA also estimated the costs associated with developing
and implementing a pollution abatement plan. In many cases, EPA believes that the requirements for the
pollution abatement plan will be satisfied by an approved SMCRA plan. However, EPA recognizes that
some operators may be required to implement additional or incremental BMPs under the proposed rule
beyond what is included in a SMCRA-approved pollution abatement plan. EPA developed a general
estimate of the potential costs of these additional BMPs.
For the Western Alkaline Coal Mining Subcategory, EPA believes that plans developed to comply with
SMCRA requirements will usually fulfill the requirements proposed by EPA for sediment control plans.
The requirement to use watershed modeling techniques is also consistent with OSM reclamation plans.
While OSM does not specifically require modeling, most coal mine operators already perform watershed
modeling to support their SMCRA permit application that is sufficient to meet the proposed requirements.
However, some incremental costs may occur where the rule increases model complexity. EPA developed a
conservative estimate of these costs by assuming that all existing surface mines would need to perform
additional modeling effort. EPA also estimated the cost savings for this Subcategory expected to result
from lower capital and operating costs associated with implementing the proposed BMP plans, and from an
expected reduction in the reclamation bonding period.
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Except where noted, all costs are reported in 1998 dollars; the present value of costs that are incurred in the
future are calculated using a 7 percent discount rate; and annualized costs are developed using an
annualization period of 10 years and a discount rate of 7 percent. The following formula was used to
calculate annualized costs and cost savings:
T x (I + T} "
Annualized Cost = PV x ! L-
(1 + r)n - 1
where
PV = Present value of compliance costs
r = Discount rate (7% in this analysis)
t = Amortization period (10 years)
4.1 Coal Remining
4.1.1 Methodology
EPA projected that states will permit 43 to 61 new remining sites each year under the proposed
subcategory (see Chapter 3). EPA projected costs for each remining site by calculating the cost of added
requirements beyond those currently required for Rahall permits. These include the cost of increased
monitoring requirements for determining baseline, the cost of potential increases in compliance monitoring
requirements, and the potential costs associated with implementing the required pollution abatement plan.
4.1.2 Monitoring Costs
To assess the increased monitoring requirements of the proposal, EPA evaluated current state requirements
for operations permitted under the Rahall provision and calculated the proposed sample collection costs
that exceed the current state requirements. Current state sample collection requirements for determining
and monitoring baseline are included in Appendix A.
Under the proposed rule, EPA is requiring that operators conduct one year of monthly sampling to
characterize the baseline pollutant levels for pH, iron (total), and manganese (total). Although most
states with remining activities have similar requirements, remining sites in Alabama and Kentucky will
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be required to add six samples annually. EPA did not have data for Illinois, Indiana, or Tennessee, because
the remining operations that occur in these states do not incorporate Rahall provisions for pre-existing
discharges. For these states, EPA has conservatively assumed monitoring costs for 12 additional samples
annually, and that remining operators would have to purchase and install flow weirs to comply with the
baseline determination and monitoring requirements.
Although EPA is not requiring a specific monitoring frequency to demonstrate compliance, EPA has
assumed monthly compliance monitoring for costing purposes. Most states already have similar
requirements, with the exception of Ohio, which currently requires quarterly sampling. Again, EPA did not
have data for Illinois, Indiana, or Tennessee, because these states do not incorporate Rahall provisions in
their remining permits. EPA has conservatively assumed that an additional 12 compliance monitoring
samples per year would be required for these states and has costed this requirement for five years.
Because each remining site will typically have more than one pre-existing discharge, EPA reviewed
Pennsylvania remining sites to estimate the average number of pre-existing discharges per site. EPA used
this calculated average of four pre-existing discharges per site for estimating baseline determination and
compliance monitoring costs. Tables 4-1 and 4-2 show the expected incremental monitoring costs required
for each state (low and high estimates respectively). These represent an upper bound estimate of additional
monitoring requirements based on the assumptions discussed above.
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Table 4-1: Estimated Increase in Annual Monitoring Costs: Low Estimate
Baseline Monitoring Compliance Monitoring
Annual No.
Total Incremental Cost
State #Add'l Increased #Add'l Increased of Sites Baseline Compliance
Samples/ Cost/ Samples/ Cost/ Permitted Monitoring Monitoring
Year Mine (PV)*
AL
IL***
IN***
KY
MD
OH
PA
TN***
VA
WV
Total
6
12
12
6
0
0
0
12
0
0
$1,128
$6,928
$6,928
$1,128
$0
$0
$0
$6,928
$0
$0
Total
Year Mine (PV)**
0
12
12
0
0
8
0
12
0
0
$0
$9,900
$9,900
$0
$0
$6,600
$0
$9,900
$0
$0
0
0
4
6
1
17
21
7
7
0
64
$0
$0
$27,712
$6,768
$0
$0
$0
$48,496
$0
$0
$82,976
$0
$0
$9,024
$0
$0
$25,568
$0
$15,792
$0
$0
$50,384
$0
$0
$36,736
$6,768
$0
$25,568
$0
$64,288
$0
$0
$133,360
* Number of additional samples per year * $188/sampling period ($47 per sample * 4 average sampling points)
** Number of additional samples per year * $825 present value of annual compliance sampling (present value of $160 per year for 5 years @ 7%)
*** Baseline requirements not available; assumed to require 12 additional samples per year for baseline and compliance monitoring plus 4 flow weirs at $1,168 per weir.
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Table 4-2: Estimated Increase in Annual Monitoring Costs: High Estimate
Baseline Monitoring Compliance Monitoring
Annual No.
State #Add'l Increased #Add'l Increased of Sites
Samples/ Cost/ Samples/ Cost/ Permitted
Year Mine (PV)*
AL
jL###
IN***
KY
MD
OH
PA
TN***
VA
WV
Total
6
12
12
6
0
0
0
12
0
0
$1,128
$6,928
$6,928
$1,128
$0
$0
$0
$6,928
$0
$0
Total Incremental Cost
Baseline Compliance
Monitoring Monitoring
Total
Year Mine (PV)**
0
12
12
0
0
8
0
12
0
0
$0
$9,900
$9,900
$0
$0
$6,600
$0
$9,900
$0
$0
0
0
6
8
1
25
30
10
10
0
91
$0
$0
$41,568
$9,024
$0
$0
$0
$69,280
$0
$0
$119,872
$0
$0
$13,536
$0
$0
$37,600
$0
$22,560
$0
$0
$73,696
$0
$0
$55,104
$9,024
$0
$37,600
$0
$91,840
$0
$0
$193,568
* Number of additional samples per year * $188/sampling period ($47 per sample * 4 average sampling points)
** Number of additional samples per year * $825 present value of annual compliance sampling (present value of $160 per year for 5 years @ 7%)
*** Baseline requirements not available; assumed to require 12 additional samples per year for baseline and compliance monitoring plus 4 flow weirs at $1,168 per weir.
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As shown in Tables 4-1 and 4-2, the total annual incremental monitoring costs are estimated to be in the
range of $133,500 to $193,500. Of this, between $83,000 and $120,000 is associated with incremental
baseline monitoring requirements and between $50,500 and $73,500 results from incremental compliance
monitoring during a five year remining period.
4.1.3 Pollution Abatement Plan Costs
In addition to monitoring costs, remining operators must develop and implement a site-specific pollution
abatement plan for each remining site. In many cases, EPA believes that the requirements for the pollution
abatement plan will be satisfied by an approved SMCRA plan. However, EPA recognizes that some
operators may be required to implement additional or incremental BMPs under the proposed rule beyond
what is included in a SMCRA-approved pollution abatement plan. EPA developed a general estimate of
the potential costs of additional BMPs based on review of existing remining permits contained in the EPA's
Coal Remining Database, and on information provided in the Coal Remining Best Management Practices
Guidance Manual (U.S. EPA, 2000d).
EPA determined that the most likely additional BMP that NPDES permit writers might require would be a
one-time increase in the amount of alkaline material used as a soil amendment to prevent the formation of
acid mine drainage. EPA assumed that an average mine facility requiring additional BMP effort would
need to increase its alkaline addition by a rate of 50 to 100 tons per acre to meet the additional NPDES
permit review requirements. Finally, EPA estimated an average cost for alkaline addition of $12.90/ton,
and assumed that 10 percent of surface and underground remining sites would be required to incur these
additional BMP costs.7 Because the typical BMP for coal refuse piles is simply removal of the pile, EPA
believes that no incremental BMP costs would be incurred for these sites.
Based on EPA's estimate that between 309 and 438 acres could require additional alkaline addition each
year, the estimated annual cost of additional BMP requirements would range from $199,500 to $565,000:
(3,091 acres in remining * 10% requiring alkaline addition * 50 tons alkaline material per acre *
$12.90 per ton for alkaline material); and
7EPA assumed that ten percent of the surface and underground remining site acreage in states other
than Pennsylvania would require addition of alkaline material.
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(4,380 acres in remining * 10% requiring alkaline addition * 100 tons alkaline material per acre *
$12.90 per ton for alkaline material).
4.1.4 Total Annual Compliance Costs for the Coal Remining Subcategory
The estimated annual incremental costs attributed to the proposed rule range from $333,000 and $758,500
per year. This cost includes $133,500 to $193,500 in estimated incremental monitoring costs, and
$199,500 to $565,000 in estimated additional BMP effort per year. These costs are based on EPA's
estimates of future remining, and would most likely be incurred by new remining operations. Table 4-3
summarizes the incremental costs associated with the proposed subcategory.
Table 4-3: Annual Costs for the Coal Remining Subcategory
Monitoring Costs $133,500 - $193,500
Additional BMP Effort $199,500 - $565,000
Total Compliance Costs $330,000 - $758,500
4.2 Western Alkaline Coal Mining
4.2.1 Methodology
The cost impacts of the proposed subcategory will vary, depending on the site-specific conditions at each
eligible coal mine. However, based on data and information gathered to date, EPA believes that the costs
of reclamation under the proposed rule will be less than or equal to reclamation costs under the existing
effluent guidelines for each individual operator, and thus, for the subcategory as a whole.
EPA expects that the sediment control plan will largely consist of materials generated as part of the
SMCRA permit application. The SMCRA permit application requires that a coal mining operator submit
a reclamation plan, documentation and analysis to OSM or the permitting authority for approval. Based
on these requirements, EPA believes that plans developed to comply with SMCRA requirements will
usually fulfill the requirements proposed by EPA for sediment control plans. The requirement to use
watershed modeling techniques is also consistent with OSM reclamation plans. While OSM does not
specifically require modeling, most coal mine operators already perform watershed modeling to support
4-7
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their SMCRA permit application that is sufficient to meet the proposed requirements. However, some
incremental costs may occur where the rule increases model complexity. As discussed below, these costs
would be offset by reduced sediment control costs associated with implementing the proposed BMP plans
and savings resulting from an expected reduction in the reclamation bonding period.
4.2.2 Watershed Modeling Costs
As discussed above, EPA believes that some operators may incur incremental watershed modeling costs
where the proposed rule increases model complexity. Information provided by OSM indicates that a
typical surface mine operator may incur a one-time additional cost of zero to $50,000 to meet the modeling
requirements (U.S. DOI, 1999a, 1999b). This figure represents the additional modeling effort attributed to
the proposed requirements; it does not represent the total cost associated with watershed modeling.
Although most sites would not incur additional modeling costs, EPA conservatively assumes that all 46
existing surface operators would incur additional modeling costs of $50,000. The $50,000 estimate
represents an annualized cost of $7,119 per mine, resulting in atotal cost estimate of $327,500 (46 sites *
$7,119 per site). These costs would be offset by the cost savings discussed below.
4.2.3 Reduced Sediment Control Costs
EPA projects that cost savings would result from lower capital and operating costs associated with
implementing the proposed BMP plans relative to the predominant use of sedimentation ponds. The costs
savings for sediment controls based on BMPs were calculated for a representative model mine and were
submitted by the Western Coal Mining Work Group (WCMWG, 1999a). The cost model is discussed in
detail in the Development Document for Proposed Effluent Limitations Guidelines and Standards for the
Western Alkaline Coal Mining Subcategory (U.S. EPA, 2000c). The cost estimates of the model mine
relied on data taken from case study mine permit applications, mine records, technical resources, and
industry experience. The study estimated capital costs (design, construction, and removal of ponds and
BMPs) and operating costs (inspection, maintenance, and operation) over the anticipated bonding period.
EPA extrapolated from the WCMWG model mine analysis and industry profile information to estimate
savings in sediment control costs for the proposed subcategory. Cost savings for reclamation at existing
western surface mines were calculated by extrapolating the cost savings per disturbed acre calculated for
the model mine. To the extent that individual mines would achieve lower or higher savings per acre than
-------
estimated for the model mine based on site-specific conditions, this estimate of total cost savings may be
over- or underestimated.
Table 4-4 shows the sediment control costs estimated by the WCMWG for post-mining reclamation for the
model mine.
Table 4-4: Model Mine Reclamation Sediment Control Costs:
Current Effluent Guideline versus Proposed Subcategory (1998 dollars)
Year
1
2
3
4
5
6
7
8
9
10
Total
(undiscounted)
Current
Capital
$975,435
$2,720
$0
$0
$0
$0
$0
$0
$0
$171,607
$1,149,761
Effluent Guideline
Operating
$15,384
$142,804
$190,181
$88,956
$26,231
$161,999
$15,269
$15,269
$133,377
$15,269
$804,739
Proposed
Capital
$760,816
$43,577
$0
$0
$0
-
-
-
-
-
$804,393
Subcategory
Operating
$3,300
$103,368
$59,876
$77,895
$14,147
-
-
-
-
-
$258,586
Source: WCMWG, Draft Western Alkaline Mining Subcategory Mine Modeling and Performance - Cost-Benefit Analysis, June 9, 1999,
Tables 4-11 and 4-18.
The present value of the reclamation costs over the ten year period (discounting at seven percent) is
$1,700,000 for the existing guideline and $1,028,000 for the proposed Subcategory, or a present value total
savings of $672,000 over ten years, as shown in Table 4-5. This represents a 39 percent overall reduction
in costs, or $1,764 in savings per acre disturbed for the 381 acre model mine.
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Table 4-5: Present Value of Sediment Control Savings per Acre Reclaimed
Year Capital
Operating
Total
Present Value
Proposed Subcategorv
1 $760,816
2 $43,577
3 $0
4 $0
5 $0
Total $804,393
$3,300
$103,368
$59,876
$77,895
$14,147
$258,586
$764,116
$146,945
$59,876
$77,895
$14,147
$1,062,979
$764,116
$137,332
$52,298
$63,586
$10,793
$1,028,124
Existing Effluent Guideline
1 975,434.77
2 2,720.00
3 0.00
4 0.00
5 0.00
6 0.00
7 0.00
8 0.00
9 0.00
10 171,606.66
Total 1,149,761.43
Present value of total savings over
Present value of savings per acre
15,383.76
142,804.48
190,181.32
88,955.99
26,230.71
161,998.91
15,269.22
15,269.22
133,376.64
15,269.22
804,739.47
10 years
990,818.53
145,524.48
190,181.32
88,955.99
26,230.71
161,998.91
15,269.22
15,269.22
133,376.64
186,875.88
1,954,500.90
990,819
136,004
166,112
72,615
20,011
115,503
10,175
9,509
77,626
101,648
1,700,021
671,897
1.764
EPA estimated annual savings for the existing western alkaline surface mines by multiplying the present
value per acre of model mine savings ($1,764) times the estimated acres disturbed annually at each mine.
EPA used the projected disturbance acreage divided by the remaining mine life to estimate the annual acres
reclaimed at each existing mine site. This information was available for 26 mines and totaled 9,880 acres
per year, or an average of 380 acres per mine. EPA assumed that the remaining 20 mines with incomplete
data would each reclaim the average 380 acres per year, resulting in a total of 17,480 acres
[9,880+(20*380)J. Based on an average savings of $1,764 per acre, EPA projects that the proposed
subcategory will result in annual savings of $30.8 million, as shown in Table 4-6.
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Table 4-6: Estimated Savings in Sediment Control Costs
Mine Life Disturbance Disturbance Estimated
Acres Acres/Mine Annual
Life Reclamation
Savings ($)**
$12
$6
$18
$15
$14
$24
$12
$14
$25
$16
$12
$30
$18
$28
$12
$18
$17
$16
$9
$26
$18
$6
$15
$28
$32
$20
Total for 26 mines:
Total for 46 mines:*
$16,351
$7,236
$11,000
$8,207
$7,275
$12,172
$5,765
$6,631
$10,429
$6,300
$4,546
$11,300
$6,216
$8,579
$3,576
$5,172
$4,485
$3,810
$2,000
$4,960
$2,085
$500
$1,161
$1,886
$2,129
$875
$1,363
$1,206
$611
$547
$520
$507
$480
$474
$417
$394
$379
$377
$345
$306
$298
$287
$264
$238
$222
$191
$116
$83
$77
$67
$67
$44
$2,403,597
$2,127,384
$1,078,000
$965,143
$916,650
$894,642
$847,455
$835,506
$735,870
$694,575
$668,262
$664,440
$609,168
$540,477
$525,672
$506,856
$465,385
$420,053
$392,000
$336,517
$204,330
$147,000
$136,534
$118,818
$117,361
$77,175
$17,428,870
$30,835,270
*Based on the assumption that sites for which projected disturbance
acres or mine life were not reported will disturb an average of 380
acres per year.
** Annual acres disturbed * the present value of savings per acre
estimated for the model mine ($1,764).
4.2.4 Savings Associated with Earlier Bond Release
EPA also calculated cost savings that may result due to earlier Phase 2 bond release. Under SMCRA
requirements, permit applicants must post a reclamation bond to ensure that the regulatory authority
will have funds to reclaim the site if the permitee fails to complete the reclamation plan approved in the
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permit. Permitees may apply for release of all or part of the bond as reclamation is completed. The
regulations recognize three phases of reclamation for purposes of bond release:
Phase 1: backfilling, regrading and drainage control;
• Phase 2: topsoil replacement and establishment of vegetation; and
Phase 3: meeting the revegetation success standards and completing the revegetation
responsibility period.8
The amount of bond release at each phase varies from site to site. Typical stages of bond release in the
West are 60 percent released at the end of Phase 1, an additional 25 percent released at the end of Phase 2,
and the final 15 percent released at the end of Phase 3.9
The OSM hydrology requirements to release performance bonds at Phase 2 at 30 CFRpart 800.40(c)(l)
requires compliance with the existing effluent standard. The use of BMPs under the proposed subcategory
is expected to allow earlier Phase 2 bond release, because less time will be needed to meet the hydrology
bond release requirements. According to information provided by WCMWG (1999a), meeting the existing
guidelines in the arid/semiarid west may take 10 years or longer, and may require significant topographic
modifications and excessive maturation of vegetation. In addition, sampling to demonstrate compliance
with existing standards is difficult, given the infrequent and flash nature of flows in the region. The BMP-
based approach in the proposed rule uses the inspection of BMP design, construction, operation and
maintenance to demonstrate compliance instead of the current sampling and analysis of surface water
drainage for reclamation success evaluations. The report estimates that the BMP-based approach would
reduce the time it takes reclaimed lands to qualify for Phase 2 bond release to about five years.
8The revegetation responsibility period is ten years in the arid/semiarid west.
9Personal communication with Wayne Erickson, Habitat Management, Inc. OSM regulations
require that 15 percent of the bond amount remain in place until the end of the revegetation responsibility
period.
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The savings associated with earlier Phase 2 bond release will vary among individual mines, depending on
the bond amounts and on the type of bond. The cost incurred by mine operators to maintain bonds varies
according to the type of bond. For example:
• Interest must be paid on certificates of deposit;
Surety bonds require an annual payment based on the size of the bond - typical annual
fees for western mines are reported to range from $3.75 to $5.50 per $1,000 in bond
value;10
Self-bonding requires that companies submit periodic reports, and may prevent the use of
some company assets as collateral for other financing or may prevent the sale of assets.
A survey conducted by the Office of Surface Mining in 1995 found that
...approximately 75 percent of the bonds posted for coal mining operations were corporate surety bonds.
Small operations with bond amounts in the tens of thousands of dollars tend to use certificates of deposit
and other assets. Bond amounts in excess of tens or hundreds of millions of dollars are typically in the
form of corporate surety bonds (U.S. DOI, 1998c).
EPA used a number of simplifying assumptions about the timing of reclamation and bond release and the
cost of maintaining reclamation bonds to estimate the savings associated with earlier Phase 2 bond release.
The WCMWG industry profile provides information necessary to calculate associated bond savings
(reclamation bond amounts, disturbance acreage, and mine life) for twenty-six mines. EPA calculated
savings for each these mines using the following assumptions:
The amount of bond released at the end of Phase 2 is equal to 25 percent of the reported
bond amount;
• All bonds are surety bonds, with annual fees of between $3.75 and $5.50 per thousand;
10Personal communication with Wayne Erickson, Habitat Management, Inc.
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• Mining under the current permit is assumed to end in year 5. Savings is calculated as the
difference between the present value of maintaining the bond for 10 years after Phase 2
bond release (i.e., in year 15) and the present value of maintaining it for 5 years (i.e., in
year 10). Costs are annualized over the 5 year permit period using a 7 percent discount
rate.
The calculation steps are as follows:
(1) Calculate the Permit Period (5-year) Disturbance Acres:
= [ projected disturbance acres (total) / mine life ] * 5
(2) Calculate Bond Amount Attributed to Permit Period Disturbance Acres :
= total bond amount * [ permit period disturbance acres / projected disturbance acres (total) ]
(3) Calculate the Phase 2 Bond Amount Attributed to Permit Period Disturbance Acres:
= 25% of the total bond amount attributed to permit period disturbance acres
(4) Calculate the Annual Cost of Maintaining the Phase 2 Bond Amount:
= Phase 2 bond amount (in Sthousands)* $3.75 (low estimate) or $5.50 (high estimate) annual
surety bond fee per $thousand;
(5) Calculate the Present Value of Savings due to Earlier Phase 2 Bond Release:
= present value of avoided payment of surety bond costs in years 11 through 15, discounted at 7
percent;
(6) Annualize the Present Value of the Avoided Surety Bond Costs:
annualized present value over the 5 year permit period, at 7 percent.
The simplified assumptions regarding the timing of different stages of reclamation, as well as the
assumptions regarding the type and cost of bonds, may under- or overstate actual savings. The analysis
understates total savings by ignoring savings associated with reclamation bonds posted under future
permits, but may overstate costs by assuming that all bonds are surety bonds rather than self-bonding. In
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addition, the timing of Phase 2 bond release will vary from site to site depending on the nature of the BMPs
used and the success in establishing revegetation. This calculation assumes that mines will achieve Phase 2
bond release five years earlier under the proposed subcategory than would otherwise occur, but the actual
results may differ from mine to mine.
Tables 4-7 and 4-8 show that the total estimated present value of savings for the 26 mines for which bond
savings could be calculated range from $197,000 to $289,000 when annualized at seven percent over the
five year permit period. EPA assumes that the remaining 20 mines for which savings could not be
calculated would achieve the average savings per mine ($7,600 to $11,100) resulting in total annualized
savings between $349,000 and $511,500.
4-15
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Table 4-7: Estimated Savings from Earlier Phase 2 Bond Release- Low
Permit
Projected Period
Bond Am't Disturbanc Projected Disturbanc
($000) e Acres Mine Life e Acres*
$124,002
$61,037
$79,854
$111,000
$149,388
$34,446
$142,448
$120,200
$50,026
$46,857
$47,297
$50,000
$42,000
$27,943
$24,950
$37,124
$58,500
$58,425
$46,838
$18,500
$6,198
$16,000
$2,945
$3,800
$2,009
$344
4,546
2,000
16,351
11,000
10,429
500
8,579
12,172
7,275
6,631
8,207
6,216
4,485
5,765
3,576
5,172
11,300
2,129
4,960
6,300
7,236
3,810
875
1,886
1,161
2,085
12
9
12
18
25
6
28
24
14
14
15
18
17
12
12
18
30
32
26
16
6
16
20
28
15
18
1,894
1,111
6,813
3,056
2,086
417
1,532
2,536
2,598
2,368
2,736
1,727
1,319
2,402
1,490
1,437
1,883
333
954
1,969
6,030
1,191
219
337
387
579
Phase 2
Estimate
PVof
Bond Annual Avoided
Release Surety Cost Surety Fees Annualized
($000)** ($)*** ($)(®, Savings ($)f
$12,917
$8,477
$8,318
$7,708
$7,469
$7,176
$6,359
$6,260
$4,467
$4,184
$3,941
$3,472
$3,088
$2,911
$2,599
$2,578
$2,438
$2,282
$2,252
$1,445
$1,291
$1,250
$184
$170
$167
$24
$48,438
$31,790
$31,193
$28,906
$28,010
$26,911
$23,847
$23,477
$16,750
$15,689
$14,780
$13,021
$11,581
$10,915
$9,746
$9,668
$9,141
$8,558
$8,444
$5,420
$4,842
$4,688
$690
$636
$628
$90
Total for 26 mines:
Estimate for 46
mines based on
the average
savings
per mine for 26
mines:
$100,961
$66,261
$65,017
$60,250
$58,383
$56,091
$49,706
$48,933
$34,912
$32,701
$30,807
$27,140
$24,138
$22,751
$20,314
$20,151
$19,052
$17,838
$17,601
$11,297
$10,093
$9,770
$1,439
$1,326
$1,309
$187
$808,428
$1,430,296
$24,624
$16,160
$15,857
$14,694
$14,239
$13,680
$12,123
$11,934
$8,515
$7,975
$7,514
$6,619
$5,887
$5,549
$4,954
$4,915
$4,647
$4,351
$4,293
$2,755
$2,462
$2,383
$351
$323
$319
$46
$197,169
$348,837
* Projected disturbance acres divided by project mine life * 5
** Bond amount * ratio of permit period to total disturbance acres * 25% released at Phase 2
*** Phase 2 bond release * $3.75 per $1,000 bond value surety fee
@Present value of avoided annual surety costs in years 11 through 15, discounted at 7 percent
f Annualized over 5 years at 5 percent
4-16
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Table 4-8: Estimated Savings from Earlier Phase 2 Bond Release - High Estimate
Bond Am't.
fSOOO)
$124,002
$61,037
$79,854
$111,000
$149,388
$34,446
$142,448
$120,200
$50,026
$46,857
$47,297
$50,000
$42,000
$27,943
$24,950
$37,124
$58,500
$58,425
$46,838
$18,500
$6,198
$16,000
$2,945
$3,800
$2,009
$344
Total for 26
Total for 46
Permit
Projected Period
Disturbanc Projected Disturbanc
e Acres Mine Life e Acres*
4,546
2,000
16,351
11,000
10,429
500
8,579
12,172
7,275
6,631
8,207
6,216
4,485
5,765
3,576
5,172
11,300
2,129
4,960
6,300
7,236
3,810
875
1,886
1,161
2,085
mines:
mines, based on
12
9
12
18
25
6
28
24
14
14
15
18
17
12
12
18
30
32
26
16
6
16
20
28
15
18
the average
1,894
1,111
6,813
3,056
2,086
417
1,532
2,536
2,598
2,368
2,736
1,727
1,319
2,402
1,490
1,437
1,883
333
954
1,969
6,030
1,191
219
337
387
579
Phase 2
Bond
Release
fSOOO)**
$12,917
$8,477
$8,318
$7,708
$7,469
$7,176
$6,359
$6,260
$4,467
$4,184
$3,941
$3,472
$3,088
$2,911
$2,599
$2,578
$2,438
$2,282
$2,252
$1,445
$1,291
$1,250
$184
$170
$167
$24
savings per mine for 26
Annual
Surety Cost
f$)***
$71,043
$46,625
$45,750
$42,396
$41,082
$39,469
$34,976
$34,432
$24,566
$23,010
$21,678
$19,097
$16,985
$16,009
$14,294
$14,179
$13,406
$12,552
$12,385
$7,949
$7,102
$6,875
$1,012
$933
$921
$131
mines:
PVof
Avoided
Surety Fees Annualized
f$)®, Savings f$)f
$148,077
$97,183
$95,358
$88,367
$85,628
$82,267
$72,902
$71,768
$51,204
$47,961
$45,184
$39,805
$35,403
$33,368
$29,794
$29,554
$27,943
$26,163
$25,815
$16,569
$14,803
$14,330
$2,110
$1,945
$1,919
$274
$1,185,694
$2,097,766
$36,115
$23,702
$23,257
$21,552
$20,884
$20,064
$17,780
$17,504
$12,488
$11,697
$11,020
$9,708
$8,634
$8,138
$7,266
$7,208
$6,815
$6,381
$6,296
$4,041
$3,610
$3,495
$515
$474
$468
$67
$289,179
$511,624
* Projected disturbance acres divided by project mine life * 5
** Bond amount * ratio of permit period to total disturbance acres * 25% released at Phase 2
*** Phase 2 bond release * $5.50 per $1,000 bond value surety fee
@Present value of avoided annual surety costs in years 11 through 15, discounted at 7 percent
f Annualized over 5 years at 5 percent
4-17
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4.2.5 Total Compliance Costs for the Western Alkaline Coal Mining Subcategory
The estimated net savings in compliance costs associated with the proposed subcategory, considering
additional modeling costs and the savings to mining operations in sediment control and bonding costs, is
estimated to be approximately $31.0 million, as shown in Table 4-9.
Table 4-9: Annual Costs and Cost Savings for the Western
Alkaline Coal Mining Subcategory
Incremental Modeling Costs $ 327,500
Sediment Control Costs (Savings) ($ 30,835,000)
Earlier Phase 2 Bond Release ($ 349,000 - $ 511,500)
(Savings)
Total Compliance Costs ($ 30,857,000 - $ 31,019,000)
(Savings)
4.3 Summary of Compliance Costs
Table 4-10 summarizes EPA's estimates of the compliance costs and cost savings associated with the
proposed rule. These costs are before-tax changes in costs incurred by the mine operations eligible for the
two proposed subcategories.
Table 4-10: Summary of Estimated Annual Compliance Costs and Cost Savings
Remining Subcategory:
- Monitoring Costs $133,500 - $193,500
- Additional BMP Effort $199,500 - $565,000
Subtotal $ 333,000 - $758,500
Western Alkaline Coal Mining Subcategory
- Incremental Modeling Costs $327,500
- Sediment Control Costs (Savings) ($30,835,000)
- Earlier Phase 2 Bond Release (Savings) ($349,000)-($511,500)
Subtotal ($30,85 7,000)-($31,019, OOP)
Total Compliance Costs (Net Savings) ($30,098,000 - $30,686,000)
4-18
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Chapter 5
Industry Impacts
5.0 Introduction
This chapter presents EPA's analysis of the economic impacts to the coal mining industry as a result of
compliance with the proposed rule. The analysis considers expected impacts on the profitability of coal
mining projects at the mine and company level, and supports the Agency's findings about the economic
achievability of the proposed rule. EPA assessed the potential for significant industry-level changes in coal
production, prices, and employment by comparing estimated costs, cost savings, and direct changes in
employment under the proposed rule with current industry levels. This chapter also examines the potential
impacts on small coal mining firms and on new sources, and assesses whether the proposed rule has the
potential to create disproportionate impacts for these two categories.
5.1 Impacts of the Coal Remining Subcategory
5.1.1 Methodology
EPA is required to assess the economic achievability of effluent limitations guidelines and standards that
are based on the best available technology economically achievable (BAT). To assess the economic
achievability of the requirements, EPA assesses the expected impacts on the profitability of the potentially
affected facilities, the firms that own these facilities, and the directly-affected industry as a whole.
Requirements that may result in significant numbers of facility or firm closures, or that may otherwise
cause significant reductions in financial returns to the affected economic activities, may be deemed to be
economically unachievable.
EPA believes that the proposed option will not impact existing Rahall-type permits with established BPJ
limitations. EPA believes that it may not be feasible for a remining operator to re-establish baseline
pollutant levels during active remining. Therefore, EPA is considering an alternative where pre-existing
discharges at these operations would remain subject to baseline pollutant levels established during the
original permit application. For purposes of this economic analysis, EPA assumes that this alternative
5-1
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will apply. Thus, the proposed rule will not have any economic impacts on operations under existing
Rahall-type permits. For new permits, remining operators will have the opportunity to assess the overall
economic return to remining in compliance with the proposed requirements before investing at a remining
site.
The proposed rule will encourage remining by reducing uncertainty about Clean Water Act requirements
for remining sites. The rule will reduce uncertainty about the steps that must be taken for a permit to be
approved in two ways: (1) by clarifying procedures to establish baseline conditions and monitor for
compliance with permit requirements, and (2) by providing guidance on the use of BMPs in a pollution
abatement plan to achieve the proposed requirements (see U.S. EPA, 2000d). EPA expects that the rule
will create opportunities for profitable remining at additional AML sites, particularly those with pre-
existing discharges.
The methods used to assess the economic achievability of the proposed Coal Remining Subcategory differ
from approaches EPA has used in analyses for other rules because EPA believes that the proposed
remining requirements will only affect new remining permits. Hence, information needed to quantify the
economic impacts to industry in terms of facility closures or impacts to firm financial ratios is not
available. Alternatively, EPA compared the potential added costs of the proposed requirements with the
current price of coal produced from the Appalachian region to provide a measure of economic impacts.
Where additional requirements imposed by the proposed subcategory represent only a small percentage of
the price received for coal, EPA concludes that the proposed requirements will not have a significant
economic impact on potential remining projects. EPA also evaluated the relative costs imposed on mines
owned by small entities to assess the potential for differential impacts.
5.1.2 Results
EPA expects that the proposed rule will create increased economic incentives for remining by increasing
the expected returns to remining sites with pre-existing discharges. The use of standard procedures to
characterize baseline conditions and demonstrate compliance, and EPA's guidance on the use and
performance of BMPs (see U.S. EPA, 2000d) will reduce the uncertainties associated with remining sites
containing pre-existing discharges. Currently, companies in some states face substantial uncertainty
about permit requirements, and about their ability to demonstrate compliance with Rahall requirements
for pre-existing discharges. Profit-maximizing investors require higher expected returns to justify the
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additional risk of investments with uncertain outcomes. Therefore, some sites that would otherwise provide
acceptable returns to remining, if not subject to uncertainty, are not currently remined. Based on
Pennsylvania's experience with its standardized remining permit program, EPA expects the reduced
uncertainty provided by the proposed rule to make additional sites with pre-existing discharges attractive
for remining investments.
As discussed in Chapter 4, the only potential costs imposed by the proposed rule are: (1) costs associated
with additional monitoring where the proposed requirements exceed current state requirements for Rahall
permits; and (2) potential costs associated with implementing the required pollution abatement plan (i.e.,
additional BMP requirements beyond what is included in a SMCRA-approved pollution abatement plan at
some sites). The following sections compare these additional costs with the average price of Appalachian
coal as a basis for assessing the economic achievability of these requirements.
Impact of Additional Monitoring Costs
An analysis by the Department of Energy of potential remining sites estimated an average coal recovery of
between 2,300 and 3,300 ton per acre of remined land (Veil, 1993). At these coal recovery rates, the
estimated steady state annual increase in acres being remined would produce between 7.1 and 14.5 million
tons of coal per year. This represents only 1.5 to 3.1 percent of total 1997 Appalachian coal production of
468 million tons. Table 5-1 shows the estimated annual incremental monitoring costs per ton of coal from
remining sites for the states that have the potential to require increased monitoring.
5-3
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Table 5-1: Impact of Increased Annual Monitoring Costs Per Ton of Coal Mined
IN
KY
OH
TN
Total
Annual
Monitoring
Costs *
$55,104
$9,024
$37,600
$91,840
$193,568
Acreage in
Remining per
Year **
211
276
3,183
391
4,061
Tons of Coal
Produced***
485,300
634,800
7,320,900
899,300
9,340,300
Average
Monitoring
Cost per Ton
$0.11
$0.01
$0.01
$0.10
$0.02
* Table 4-2, high estimate.
** Table 3-1, high estimate.
*** Based on an average 2,300 tons of coal recovered per acre remined, the low end of the range estimated by DOE
(2,300 - 3,000 tons per acre). See Veil, 1993.
Because the estimates shown in Table 5-1 are based on the highest compliance monitoring cost estimates
and the low-end estimates of tonnage of coal produced, they represent an upper-bound estimate of the
economic impacts.
Under these worst-case assumptions, additional monitoring costs could represent as much as $0.10 to
$0.11 per ton remined, due primarily to the very conservative assumptions used to estimate incremental
monitoring costs for Indiana and Tennessee.11 However, even these worst-case estimates represent less
than one-half of one percent of the 1997 average price of $26.55 per ton of coal mined in the Appalachian
region (DOE/EIA, 1997). These findings suggest that the proposed incremental monitoring requirements
will not deter investments in remining projects.
Impact of Pollution Abatement Plan Costs
As discussed in Chapter 4, EPA believes that the requirements for the pollution abatement plan will be
satisfied by an approved SMCRA plan. However, EPA recognizes that additional BMP costs may be
incurred under some new remining permits, potentially reducing expected returns on investments. EPA's
"EPA did not have data on existing monitoring requirements for these states because their
remining operations do not incorporate Rahall provisions. EPA conservatively estimated incremental costs
based on: 12 baseline samples; 12 compliance monitoring samples per year for five years; and four new
flow weirs per site.
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high estimate of additional BMP costs assumes that 438 acres per year would require additional alkaline
materials, at an annual cost of $565,000. If these acres produced 1,074,000 tons of coal per year
(assuming the low-end DOE estimate of 2,300 tons per acre in Veil, 1993), the additional BMP costs
would represent only 5.6 cents per ton of coal recovered. This added cost represents only two-tenths of one
percent of the 1997 average price of $26.55 per ton of coal mined in the Appalachian region (DOE/EIA,
1997). These additional BMPs would be required by NPDES permit writers only where necessary to meet
Clean Water Act requirements. Any additional BMPs required will be site-specific, with economic
achievability considered in BPJ determination.
EPA recognizes that some of the existing AML sites may not be profitable to remine, either under current
conditions or under the proposed requirements. However, new remining operators will have the
opportunity to choose among potential remining sites, and will only select sites that they believe are
economically achievable to remine.
5.1.3 Impacts on Small Firms
The Regulatory Flexibility Act as Amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA) generally requires an agency to prepare a regulatory flexibility analysis for any rule
subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any
other statute unless the agency certifies that the rule will not have a significant economic impact on a
substantial number of small entities. An agency may certify that a rule will not have a significant economic
impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a
positive effect on all small entities subject to the rule.
For purposes of this analysis, small entity is defined as: (1) a small business that has 500 or fewer
employees (based on SBA size standards); (2) a small governmental jurisdiction that is a government of a
city, county, town, school district or special district with a population less than 50,000; and (3) a small
organization that is any not-for-profit enterprise which is independently owned and operated and is not
dominant in its field.
As discussed in Chapter 1, the current regulations at 40 CFR 434 create a disincentive for remining by
imposing limitations on pre-existing discharges for which compliance is cost prohibitive. Despite the
statutory authority provided by the Rahall Amendment, coal mining companies and states remain hesitant
to pursue remining without formal EPA guidelines. The proposed Coal Remining Subcategory provides
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standardized procedures for developing effluent limits for pre-existing discharges, thereby reducing the
uncertainty involved in interpreting and implementing current Rahall requirements. The proposed
subcategory is intended to remove barriers to the permitting of remining sites with pre-existing discharges,
and is therefore expected to encourage remining activities by small entities. Thus, the Agency concludes
that the proposed subcategory will relieve regulatory burden for all small entities and thereby certifies that
the proposed subcategory will not have a significant economic impact on a substantial number of small
entities.
Furthermore, EPA believes that the proposed subcategory is likely to create opportunities for small firms.
As described in EPA's Coal Remining and Western Alkaline Mining: Economic and Environmental
Profile, 95 percent of the firms owning coal mines in the Appalachian states are small firms as defined by
the Small Business Administration (firms with 500 or fewer employees). Furthermore, these small firms
own an estimated 74 percent of the coal mines in the Appalachian region. It is likely that firms applying
for new remining permits will be similar to, or the same as, those already active in the region. According to
an OSM source, "Quite likely, most remining related reclamation activities will be economically feasible
now and in the future only for small coal operators or, alternately, where the AML are located adjacent to
previously unmined lands containing coal" (U.S. DOI, undated). This is because many of the available
remining locations are within fragmented and relatively small sites. While small firms may be more likely
to apply for permits under the proposed subcategory than large firms, the proposed rule itself does not
create any particular advantage for small or large firms. The incremental compliance costs are likely to
vary with the size and complexity of the remining site, but not with firm size per se.
5.2 Impacts of the Western Alkaline Coal Mining Subcategory
5.2.1 Methodology
EPA developed estimates of expected annual costs and savings associated with the proposed Western
Alkaline Coal Mining Subcategory as discussed in Chapter 4. Since the proposed subcategory results in
net cost savings to existing mine operations, it is inherently economically achievable. Nonetheless, EPA
estimated changes in labor requirements attributed to the proposed rule and examined potential impacts on
coal prices. It is important to note that there is significant variability in EPA's estimates for individual
mine operations. The estimates rely on extrapolating from the model mine results using a variety of
assumptions about the timing and pace of reclamation and bond release at each site. In reality, many of
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the variables that affect employment and cost savings differ significantly among individual mining
operations. Nonetheless, the calculations provide some indication of the potential economic impacts of the
proposed rule on western alkaline coal mines.
5.2.2 Results
As discussed in Chapter 1, EPA is proposing BPT, BAT, and NSPS limitations that have an equivalent
technical basis for the Western Alkaline Coal Mining Subcategory. EPA concludes that nearly all
economic impacts are positive and finds the proposed subcategory to be a cost savings to the industry and
thus, economically achievable. Because reclamation costs under the proposal will be less than or equal to
those under the existing effluent guidelines for all individual operators (thus, to the subcategory as a
whole), no facility closures or direct job losses associated with post-compliance closure are expected.
However, EPA estimated changes in labor requirements attributed to the proposed subcategory by
extrapolating from the model mine results, which calculated changes in labor hours associated with changes
in the types of erosion and sediment control structures used. The results indicate that the proposed
subcategory would reduce annual labor requirements by approximately 0.2 work years for the model mine.
EPA assumed that each of the 46 western alkaline surface mines would experience the same employment
impact as predicted by the model mine study, resulting in the loss of 9.2 full-time employees (FTEs) per
year. This represents 0.1 percent of the total 1997 coal mine employment (6,862 FTEs) in the western
alkaline region states.
The cost savings associated with the proposed subcategory are not expected to have a substantial impact on
the industry average cost of mining per ton of coal, and are therefore not expected to have a major impact
on coal prices. While the savings are substantial in aggregate (and for some individual mine operators), on
average the savings represent a small portion of the total value of coal produced by the affected mines.
Table 5-2 compares the estimated cost savings with the value of current annual production for the 25
surface mines for which enough information was available to estimate both sediment control savings and
bond release savings. The analysis ignores potential additional modeling costs incurred at some sites, and
therefore represents an upper-bound estimate of savings. On average, the estimated cost savings are 6
cents per ton, equivalent to only 0.6 percent of the value of production. As with the Coal Remining
Subcategory, the proposed Western Alkaline Coal Mining Subcategory is not expected to result in
significant industry-level changes in coal production or prices.
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5.2.3 Impacts on Small Firms
The Regulatory Flexibility Act as Amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA) generally requires an agency to prepare a regulatory flexibility analysis for any rule
subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any
other statute unless the agency certifies that the rule will not have a significant economic impact on a
substantial number of small entities. For purposes of this analysis, small entity is defined as: (1) a small
business that has 500 or fewer employees (based on SBA size standards); (2) a small governmental
jurisdiction that is a government of a city, county, town, school district or special district with a population
less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently
owned and operated and is not dominant in its field.
In determining whether a rule has significant economic impact on a substantial number of small entities, the
impact of concern is any significant adverse economic impact on small entities, since the primary purpose
of the regulatory flexibility analysis is to identify and address regulatory alternatives "which minimize any
significant economic impact of the proposed rule on small entities" (5 U.S.C. sections 603 and 604). Thus,
an agency may certify that a rule will not have a significant economic impact on a substantial number of
small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the
small entities subject to the rule.
EPA projects that the proposed subcategory will result in cost savings for all small surface mining
operators. For all small underground mine operators, EPA projects no incremental costs, and the Agency
believes that many are likely to experience some cost savings. Chapter 4 discusses the likely cost savings
associated with the subcategory in more detail. Thus, the Agency concludes that the proposed subcategory
will not have a significant economic impact on a substantial number of small entities.
5.2.4 Impacts on New Sources
EPA is proposing NSPS limitations equivalent to the limitations that are proposed for BPT and BAT
for the subcategory. In general, EPA believes that new sources will be able to comply at costs that are
similar to or less than the costs for existing sources, because new sources can apply control technologies
more efficiently than sources that need to retrofit for those technologies. In this case, new sources
would be able to avoid costs associated with installing sedimentation ponds. There is nothing about the
5-8
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proposed rule that would give existing operators a cost advantage over new mine operators; therefore,
NSPS limitations will not present a barrier to entry for new facilities.
Table 5-2: Estimated Savings to Western Surface Mines, Per Ton and as a Percent of Current Annual
Production Value, Selected Mines
Annual Bond
Annual Savings Annual
Reclamation (mid-point Total Savings Production
Savings ($) estimate) ($) Per Year ($) (000 tons)
$2,127,384
$2,403,597
$420,052
$694,575
$147,000
$540,477
$77,175
$465,385
$204,330
$664,440
$668,262
$1,078,000
$609,168
$506,856
$894,642
$835,506
$916,650
$392,000
$118,818
$965,143
$735,870
$336,517
$847,455
$525,672
$117,361
Total $17,292,335
$3,036
$19,557
$2,939
$3,398
$16,872
$14,952
$433
$7,261
$57
$5,731
$30,370
$18,123
$8,164
$6,062
$14,719
$9,836
$10,502
$19,931
$399
$9,267
$17,562
$5,295
$6,844
$6,110
$5,366
$242,786
$2,130,420
$2,423,154
$422,991
$697,973
$163,872
$555,429
$77,608
$472,646
$204,387
$670,171
$698,632
$1,096,123
$617,332
$512,918
$909,361
$845,342
$927,152
$411,931
$119,217
$974,410
$753,432
$341,812
$854,299
$531,782
$122,727
$17,535,121
4,634
7,090
5,544
2,002
4,335
117,000
330
9,015
2,375
4,900
6,607
8,200
4,072
13,559
50,000
14,681
13,324
4,200
1,005
27,113
6,231
4,402
600
500
3,242
314,961
Annual
Value of Savings Savings as
Production per Ton % of
(000 $) ($) Value
$116,638
$178,455
$102,342
$36,957
$42,656
$1,151,280
$3,333
$88,708
$51,846
$106,967
$144,231
$213,200
$88,892
$81,354
$300,000
$88,086
$79,944
$37,800
$6,030
$162,678
$37,386
$26,412
$3,600
$3,000
$19,452
$3,171,247
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$1
$1
$0
$0
1.8%
1.4%
0.4%
1.9%
0.4%
0.0%
2.3%
0.5%
0.4%
0.6%
0.5%
0.5%
0.7%
0.6%
0.3%
1.0%
1.2%
1.1%
2.0%
0.6%
2.0%
1.3%
23.7%
17.7%
0.6%
0.6%
5-9
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Chapter 6
Additional Economic Impacts
6.0 Introduction
This chapter discusses three additional categories of potential economic impacts attributed to the proposed
rule. The chapter first estimates costs that may be incurred by NPDES permitting authorities to review
permit applications under the proposed rule. The chapter then discusses potential impacts on communities
(due to potential impacts on employment), and potential foreign trade impacts.
6.1 Costs to the NPDES Permitting Authority
Additional costs will be incurred by the NPDES permitting authority to review new permit applications and
issue revised permits based on the proposed rule. Reviewers will incur additional costs because permit
applications under the proposed rule will require more time to review than would an existing permit on the
five-year review cycle. Under the proposed rule, NPDES permitting authorities will review baseline
monitoring results and proposed pollution abatement plans for the Coal Remining Subcategory, and
watershed modeling results and sediment control plans for the Western Alkaline Coal Mining Subcategory.
EPA estimates that permit review will require an average of 35 hours of a permit writer's time per site.
This includes 25 hours per plan review (based on OSM's estimated SMCRA burden for review of
reclamation plans) plus 10 hours per plan for NPDES permit preparation. EPA assumes that permit
writers receive an hourly wage of $31.68. The average annual salary rate reported by the U.S. Department
of Labor for state and local government employees is $41,185, or $19.80 per hour for 2,080 available
labor hours per year. EPA estimates that overhead costs for state and local government employees are 60
percent of the direct labor cost. The total loaded hourly rate is therefore $31.68 (1.6*$19.80). At this rate,
each permit would cost $1,109.12
12The estimated number of hours required per permit and the average hourly rate for staff review
are consistent with those used in the ICR for the proposed rule (U.S. EPA, 2000b).
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Based on these assumptions, total annual costs to the NPDES permitting authorities range from $47,500 to
$67,500 for the 43 to 61 additional sites expected to be permitted each year under the proposed Coal
Remining Subcategory.13 An upper bound estimate of costs associated with implementing the proposed
Western Alkaline Coal Mining Subcategory assumes that all 46 existing surface mine permits are renewed
at one time. The total incremental annual cost would be $12,500 when annualized over the 5-year permit
life. Total incremental NPDES permit review costs for the proposed rule are therefore estimated to be
between $60,000 and $80,000 per year.
6.2 Community Impacts
The proposed rule could have community-level and regional impacts if it significantly altered the
competitive position of coal produced in different regions of the country, or led to growth or reductions in
employment in different regions and communities. As described in Chapter 3, there has been a long-term
trend toward higher production in the West and a decline in coal employment in the Appalachian region.
The proposed rule is not likely to have significant impacts on relative coal production in the West versus
the East. The proposed Coal Remining Subcategory may shift the location of production and employment
toward eligible abandoned mine lands, but is not likely to increase national coal production or affect coal
prices significantly overall. Furthermore, the projected cost savings to western mine operators do not
represent a large portion of the value of western coal production, and therefore are not likely to result in a
significant change in the relative cost advantage of western verses eastern production.
EPA projects that impacts of the proposed rule on coal mine employment will also be minor. Increased
remining might create new employment opportunities in some locations. If total coal production from
remining sites were to increase by the estimated 1.2 to 2.9 percent, employment in the affected regions
could also experience similar increases. However, it is possible that much of the increase in coal
production from remining will displace production elsewhere, with offsetting decreases in employment at
other locations. The proposed Subcategory may shift the location of production and employment toward
eligible abandoned mine lands, but is not likely to increase coal production and employment or affect coal
prices significantly overall.
13Remining estimates were based on the annual number of permits reviewed; hence, costs did not
need to be annualized.
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As discussed in Chapter 5, EPA estimated a reduction in labor requirements of 9.2 FTEs per year for the
proposed Western Alkaline Coal Mining Subcategory by extrapolating from the model mine results. This
represents 0.1 percent of the 6,862 total 1997 coal mine employment in the western alkaline region states.
Regional multipliers relating total direct and indirect employment to coal industry employment range from
2.6 to 3.2 for the western alkaline states (U.S. Bureau of Economic Analysis, RIMSII). Therefore, the
total impact on employment, direct and indirect, that may result from the proposed Western Alkaline Coal
Mining Subcategory is a reduction of about 24 to 29 FTEs per year. This reduction in employment might
be offset if lower costs under the proposed Subcategory encourage growth in coal mining in the western
alkaline region.
6.3 Foreign Trade Impacts
EPA does not expect any foreign trade impacts as a result of the proposed rule. U.S. coal exports consist
primarily of Appalachian bituminous coal, especially from West Virginia, Virginia and Kentucky. Coal
imports to the U.S. are insignificant (DOE/EIA, 1995; DOE/EIA, 1997). The proposed rule could
encourage additional exports, with a positive impact on the U.S. balance of trade, if coal from expanded
remining in the Appalachian region found markets overseas. Impacts are difficult to predict, however,
since coal exports are determined by economic conditions in foreign markets and changes in the
international exchange rate for the U.S. dollar. The impacts on foreign trade are likely to be small, given
the relatively small projected increase in production from increased remining.
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Chapter 7
Cost-Effectiveness
Cost-effectiveness calculations are used during the development of effluent limitations guidelines and
standards to compare the efficiency of regulatory options in removing toxic and non-conventional
pollutants. Cost-effectiveness is calculated as the incremental annual cost of a pollution control option per
incremental pollutant removal. The increments are considered relative to another option or to a benchmark,
such as existing treatment. In cost-effectiveness analysis, pollutant removals are measured in toxicity
normalized units called "pounds-equivalent." The cost-effectiveness value, therefore, represents the unit
cost of removing an additional pound-equivalent of pollutants. In general, the lower the cost-effectiveness
value, the more cost-efficient the regulation will be in removing pollutants, taking into account their
toxicity. While not required by the Clean Water Act, cost-effectiveness analysis is a useful tool for
evaluating regulatory options for the removal of toxic pollutants.
While cost-effectiveness results are usually reported with the economic analysis for effluent guidelines,
such results are not presented in this report because of the nature of the two subcategories. For the Coal
Remining Subcategory, EPA is unable to predict pollutant reductions that would be achieved at future
remining operations. It is difficult to project the results, in terms of measured improvements in pollutant
discharges, that will be produced through the application of any given BMP or group of BMPs at a
particular site. EPA is therefore unable to calculate cost-effectiveness. For the Western Alkaline Coal
Mining Subcategory, cost-effectiveness was not calculated because there are no incremental costs
attributed to the proposed option.
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Chapter 8
Environmental Impacts and Benefits
8.0 Introduction
EPA analyzed the adverse environmental impacts of current practices as a basis for assessing the
incremental environmental impacts of the proposed rule. These baseline impacts were discussed previously
in the EA. This chapter describes the methodologies EPA used to assess the environmental improvements
that will result from implementation of the proposed rule. EPA was able to quantify these environmental
improvements for some categories of benefits, and estimate their value using benefits transfer techniques
described below.
The analyses summarized in this chapter are described in detail in Benefits Assessment of Proposed
Effluent Limitations Guidelines and Standards for the Coal Mining Industry: Remining and Western
Alkaline Subcategories (hereafter referred to as the "Benefits Assessment"; U.S. EPA, 2000a).
8.1 Coal Remining Subcategory
8.1.1 Environmental Impacts of AML
Appalachia has been the site of substantial coal mining historically, and much of this mining took place
before passage of laws regulating the environmental impacts of coal mining. The result is an environmental
legacy that includes more than a million acres of abandoned mine lands (AML). Abandoned mine lands are
associated with a wide range of public health and safety problems and aesthetic degradation, including
abandoned mine openings, highwalls, unstable spoil piles, and hazardous water bodies. In addition, acid
mine drainage (AMD) from AML causes serious water quality problems. AMD is highly acidic, and may
contain high levels of dissolved metals or salts. Common AMD contaminants include total suspended
solids (TSS), iron (Fe), manganese (Mn), and aluminum (Al). AMD may contaminate groundwater and/or
run off directly into adjacent streams or creeks.
Acidity from AMD influences chemical reactions in receiving streams. Some of these reactions increase
the toxicity of other pollutants. For example, aluminum in combination with low pH can exacerbate the
8-1
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toxicity of aluminum alone and therefore represent an additional stress to aquatic receptors. Other
reactions result in aesthetic degradation of the surface water. Dissolved iron can coat banks and stream
bottoms with a rusty, brownish-red discoloration. Iron and aluminum oxides will precipitate out of solution
at higher pHs and can make the water cloudy or cover the stream bottom with a layer of colloidal material.
Such conditions are unaesthetic.
Acidity alone or in combination with high levels of metals, dissolved solids, and suspended solids affects
sensitive life stages offish and invertebrate species. The most sensitive vertebrate and invertebrate species
die off at pH between 6.0 and 6.5. Most fish species are eliminated when pH reaches 5.0, and only a few
can survive at pH 4.5. Over time, the diversity of the aquatic communities may decrease downstream from
AMD discharges.
8.1.2 Impacts of Remining on Environmental Quality
EPA's benefits analysis included an evaluation of the environmental impacts of remining best management
practices on land and water resources using data contained in EPA's Coal Remining Database (U.S. EPA,
1999a). EPA used only those mines that had both baseline and active remining or post-remining (post-
baseline) data to assess the potential impacts of remining BMPs on water quality. Complete information on
mine discharges was available for 13 mines. These 13 mines were associated with 42 pre-existing
discharges. In addition, EPA used information on 105 remining permits issued for the bituminous region in
Pennsylvania to assess benefits from improved landscape quality and enhanced public safety stemming
from remining and subsequent reclamation of AML (Hawkins, 1995).
EPA performed statistical analyses to evaluate the effect of remining on water quality at the 13 remining
sites for which sufficient water quality information was available.14 Approximately 24 to 38 percent
showed a statistically significant decrease in pollutant levels for acidity, total aluminum, total iron, and
sulfate. Flow significantly decreased for 35 percent of the post-baseline observations. The mine locations
examined in this analysis are active remining operations, and decreases in pollutant levels are expected to
become more significant with time.
14The complete list of statistical results are provided in Appendix B of the Benefits Assessment
(U.S. EPA, 2000a).
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EPA compared findings from the analysis with those from a Pennsylvania study of remining sites. The
Pennsylvania Remining Site Study of 112 closed remining sites is summarized in EPA's Coal Remining
Best Management Practices Guidance Manual (U.S. EPA, 2000d). The Pennsylvania study focused on
sites that had been reclaimed to at least Stage II bond release, and therefore reflects the effects of BMPs
more fully than the EPA's analysis. The Pennsylvania study found significant decreases or elimination of
levels for acidity, total iron, total manganese, and total aluminum in 44 percent, 42 percent, 41 percent, and
38 percent respectively, of the pre-existing discharges monitored.
EPA identified three broad categories of potential benefits from increased remining: (1) improvements in
human health and public safety; (2) ecological benefits; and (3) economic productivity benefits. Remining
can generate human health benefits by reducing the risk of injury at AML sites and reducing discharge of
acid mine drainage to waterways from which water is taken for human consumption. However, the human
health benefits associated with consumption of water and organisms taken from the water bodies affected
by AMD are unlikely to be significant because: (1) most acid mine drainage constituents are not
bioaccumulative, and therefore adverse health effects associated with fish consumption are not expected;15
and (2) public drinking water sources are treated for most acid mine drainage constituents that are
associated with adverse health effects.16 Improving public safety is a significant benefit of remining.
Eliminating safety hazards by closing abandoned mine openings, regrading highwalls, stabilizing unstable
spoils, and removing hazardous water bodies potentially prevents injuries and saves lives.
Remining and the associated reclamation of AML is expected to generate ecological and recreational
benefits by improving terrestrial wildlife habitat and reducing pollutant concentrations below levels that
adversely affect aquatic biota. Remining is also likely to improve the aesthetic quality of land and water
resources. Finally, remining and reclamation of AML sites may result in several economic productivity
benefits, including reduced drinking water treatment costs and enhanced commercial potential of the
affected areas.
15One constituent, aluminum, has a potential to bioaccumulate in aquatic biota. However, EPA has
established oral RfDs for aluminum phosphide only; no RfDs for other aluminum compounds (i.e.,
aluminum compounds found in AMD) are available.
16A secondary drinking water standard is set for sulfate, which is not enforceable. (See Table A-4
of Appendix A to U.S. EPA, 2000a.) Recent health studies indicate that sulfate may cause diarrhea.
Epidemiological data are not conclusive, however.
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8.1.3 Methodology for Estimating Benefits
EPA was able to quantify some of the benefits expected from increased remining, and was able to monetize
some of the quantified benefits using benefits transfer techniques. Benefits transfer involves use of the
results of previous benefits analyses that estimate consumers' willingness to pay (WTP) for various
improvements in environmental quality. EPA applied WTP values from previous studies of similar
environmental improvements to estimate the value of improved environmental conditions at remining sites
under the proposed rule. EPA reviewed six candidate studies to support valuation of recreational use,
passive use, and drinking water treatment benefits at remining sites, and selected two of the studies for use
in this analysis.17
The first is a study of surface mine reclamation in Appalachia by Randall et al. (1978). The study
estimates the total annual value of environmental damage and the present value of water-related damage
from disturbing land for coal mining. For analyzing impacts of the proposed rule, EPA assumes that the
benefits from AML reclamation can be equated to the value of reversing environmental damages from
disturbing land surfaces. EPA used a study by Feather et al. (1999) to assess various categories of land-
related benefits from remining. The study focuses on improved recreational opportunities for hunting and
nature viewing due to preservation of wildlife habitats.
EPA estimated the total monetary value of ecological benefits from remining by summing over each benefit
category from Randall et al. (1978) and Feather et al. (1999) deemed applicable to remining. Based on
these studies, benefits associated with reclamation of AML sites are estimated as follows:
• Estimate the percentage of additional acres expected to experience significant decreases
in AMD pollutant levels. EPA estimates that 38% to 44% of AML acres affected by
remining would experience significant decreases in AMD pollutant levels. Thus, 667 to
1,115 of the projected 1,773 to 2,512 additional AML acres reclaimed per year will
experience significant decreases in AMD pollutant levels. In-stream water quality
improvements are assumed to occur as a result of decreases in pollutant levels.
17 The studies reviewed by EPA and the criteria used to select studies for the benefits transfer
analysis are described in the Benefits Assessment document (U.S. EPA, 2000a).
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• Estimate benefit values using benefits transfer techniques. EPA applied WTP values
from the two studies to estimate the value of the environmental improvements expected to
result from the proposed subcategory.
• Estimate the annual monetized environmental benefits. To estimate total annual benefits,
the Agency calculated the present value of the stream of environmental benefits from AML
sites beginning remining each year. EPA assumes that annualized benefits from remining
begin to occur five years after permit issuance and are calculated for a five year period.
8.1.4 Results
Human Health Benefits
As noted above, EPA expects that the most significant human health benefits will result from the
elimination of safety hazards (e.g., removal of highwalls). The Agency estimated that AML sites with pre-
existing discharges have an average of 70 highwall feet per acre in the Appalachian coal region.18
Assuming that the proposed subcategory will increase acreage permitted for remining by 3,091 to 4,380
acres per year, EPA estimates that an additional 216,000 to 307,000 feet of highwall (41 to 58 mile) will
be targeted for removal each year. It is not possible to quantify or monetize human health benefits
associated with the additional highwall removal, because of a lack of information on the incidence of
accidents and human health impacts associated with unreclaimed highwalls. However, these benefits are
likely to be significant. For example, there are 305 AML problem areas in Pennsylvania where injury,
death, accident, or damage to property has been recorded (PA DEP, 1997). Ten deaths have been recorded
since 1952 at the Muddy Creek AML area (U.S. DOI, 1998a).
18EPA identified 402 Priority 3 problem areas with water quality problems in the Appalachian
region, excluding Pennsylvania (U.S. DOI, 1998b). An average problem area is 15 acres and contains
1,055 feet of highwall. Remining sites affected by the proposed rule are therefore assumed to have 70 feet
of highwall removed per acre reclaimed.
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Water-Related Benefits
Randall et al. (1978) analyzed the environmental damage from coal mining for a study area that
experienced both surface and underground mining. The regional population of the study area is about
80,000, with socioeconomic characteristics typical of the central Appalachian coal region (i.e., incomes are
lower and families are larger than the national average). The study identifies and estimates five mutually
exclusive categories of environmental damage associated with coal mining. EPA determined that three of
the damage categories were not directly applicable to remining. Therefore, EPA based the value of water-
related benefits for remining on the two remaining damage categories19:
Degradation of life-support systems for fish, wildlife, and recreation resources. The study
estimated recreational losses due to degradation of water quality for three recreational
activities ~ fishing, boating, and swimming. First, the study estimated the reduction in
recreational use (days lost) of the affected water resources due to water quality
impairment. Then, the value of the recreation lost was estimated based on the user day
values (derived from a recreational demand model). In addition, regional fishing losses
were quantified based on an annual cost offish replacement (i.e., the cost of purchasing
fish and restocking streams). The total recreational losses were estimated by summing
over the estimates offish replacement cost and lost recreation values. This yielded an
estimate of $37 (1998$) per acre per year.
Aesthetic damages to landscape and water. Aesthetic damages to water result from
increased stream siltation and discoloration of water by AMD. Aesthetic damages to the
landscape occur due to "drastic landscape modifications including exposed highwalls, flat
benches, mountaintop removal, and soil deposits." Individual willingness to pay (WTP)
for improved aesthetic quality of landscape and water are derived from a contingent
valuation study. Based on the regional WTP for aesthetic improvements, the estimated
value of aesthetic damages from mining one acre of land is $140 (1998$) per year.
19A11 study values were adjusted to 1998$ based on the relative change in the Consumer Price
Index from 1976 to 1998 (2.89) and rounded to the nearest dollar.
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Land-Related Benefits
Restoring the surface area at AML sites by removing mine shaft openings, refuse piles, and highwalls and
by vegetating surface areas will enhance sites' appearance and improve wildlife habitats. Improvements in
wildlife habitats will increase species abundance and diversity by improving species productivity and
survivability. These changes are likely to increase the value of land for post-remining uses. Among the
post-reclamation uses reported for past mining areas are wildlife habitat, hunting preserves,
pasture/hayland, public park and open space for community use (Smith and Bridger, 1998). An increase in
the number and diversity of wildlife species, improved aesthetic quality, and availability of recreation
amenities (e.g., state parks) will enhance recreational activities such as hunting, wildlife viewing, biking,
hiking, and photography.
A recent study by Feather et al. (1999) develops a recreational demand model for pheasant hunting and
wildlife viewing, where demand is modeled as a function of landscape characteristics, including measures
of the level of undisturbed surface, forest land, landscape diversity, and urbanization.20 Based on findings
from this study, the annual per acre recreational values resulting from open space preservation are (1998$):
20The study used data form the National Survey of Fishing, Hunting, and Wildlife Associate
Recreation. The FFIWAR survey collected information on demographic characteristics and recreation
behavior using a nationwide sample of 50,000 individuals.
3-7
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• Improved pheasant hunting:
The North Eastern Region (PA, DE, MD, and OH) - $7.24
The South Eastern Region (WV, VA, KY, and TN) - N/A21
• Enhanced wildlife viewing:
The North Eastern Region (PA, DE, MD, and OH) - $41.11
The South Eastern Region (WV, VA, KY, and TN) - $1.54.22
The Coal Remining Subcategory is expected to provide incentives for remining in the North Eastern and
South Eastern region states. EPA estimates an aggregate land-based benefit value of $28 per acre per year
(the sum of the average enhanced wildlife viewing value of $2 land the improved pheasant hunting value of
$7 for the North Eastern region).
Nonuse Benefits
Individuals who never visit or otherwise use a natural resource may nevertheless be affected by changes in
its status or quality. Empirical estimates indicate that such "nonuse value" may be substantial for some
resources (Harpman, 1993; Fisher and Raucher, 1984; Bergstrom, 1993). Because nonuse value is a
sizable component of the total economic value of water resources, EPA estimated changes in nonuse values
for water quality using a rule of thumb developed by Fisher and Raucher (1984). For this analysis, EPA
conservatively estimated that nonuse benefits compose one-half of water-related recreational use benefits.
EPA estimates that the annual recreational use values associated with water-related benefits are
approximately $37 per acre, resulting in corresponding nonuse values of $19 per acre.
21Not applicable. Only negligible pheasant hunting occurs in these regions.
22The disparity in the wildlife viewing values is likely to result from the difference in the presence
of wildlife conservation areas, various intensities of recreation that occur in each region, and different
population density.
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Total Annual Benefits
As shown in Table 8-1, EPA estimates that annual monetized benefits range from approximately $0.70 to
$1.2 million using a 3 percent discount rate, and between $0.6 and $0.9 million using a 7 percent discount
rate.
Table 8-1: Summary of Benefit Estimates for the Coal Remining Subcategory
Estimated Present Value Estimated Present Value
Annual of Benefits from of Benefits from
Additional Present Remining Permits Remining Permits
Acres AML Value from Issued Each Year Issued Each Year
Benefit Source reclaimed/year1 Literature2 (r=3%)3'4 (r=7%)3'4
Recreational Use of
Improved Water Bodies
667 to 1,115
$37 $100,500 to $168,000
$77,000 to $129,000
Aesthetic Improvements 667 to 1,115
to Water Bodies
Recreational Use of
Reclaimed Land
1,773 to 2,512
$140 $380,000 to $635,500 $292,000 to $488,500
$28 $202,000 to $286,000 $155,000 to $220,000
Nonuse (Improved Water 667 to 1,115
Bodies)
$19
$51,500 to $86,000
$40,000 to $66,500
Total
$734,000 to $1,175,500 $564,000 to $904,000
.. Assumes that implementation of the rule will result in an additional 3,111 to 4,407 acres of AML permitted for remining per year, that 57% of
.hose acres are actually reclaimed, and that significant water quality improvements will occur in 38% to 44% of the reclaimed acres.
2. Per acre per year ($1998). See text for literature sources for these values.
5
3. Benefits = /. {Acres reclaimed Value} I {(1 +r) (/ + 5)} , where r=discount rate and benefits from remining begin to occur five years
z=0
after permit issuance (since the average life of a remining operation is 5 years).
4. Numbers are rounded to the nearest $500.
1
tho:
In addition to the benefits EPA was able to monetize, the projected increase in remining is expected to
result in the removal of aproximately 216,000 to 307,000 feet of highwall each year, resulting in
substantial benefits associated with increased public safety. Other benefit categories that EPA was not able
to monetize include health and safety benefits, nonuse benefits related to reclaimed land, potential savings
in drinking water treatment costs, and secondary impacts from increases in tourism and recreation.
Omissions, biases and uncertainties in the benefits estimates are discussed in more detail in the Benefits
Assessment (U.S. EPA, 2000a).
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8.2 Western Alkaline Coal Mining Subcategory
8.2.1 Environmental Impacts from Western Mining
Affected western mines are located in arid and semiarid regions characterized by very low annual
precipitation. In arid and semiarid regions, the natural vegetative cover is sparse and rainfall is commonly
received during localized, high-intensity, short-duration storms. These conditions contribute to flash-floods
and turbulent flows that transport large amounts of sediment. Controlling sediment in areas that naturally
contain large amounts of sediment through the predominant use of sedimentation ponds can result in
numerous non-water quality impacts that harm the environment, including disturbing the natural hydrologic
balance, accelerating erosion, reducing groundwater recharge, reducing water availability, and impacting
large areas of land for pond construction. These impacts have the potential to disrupt fragile habitats and
sensitive hydrological features. To address these impacts, EPA is proposing to require coal mine operators
to implement BMPs so that post-mined lands are reclaimed to mimic natural conditions that were present
prior to mining activities.
Site-specific best management practices (BMPs) have the potential to conserve topsoil, control surface
erosion and sedimentation, increase vegetation density, and minimize disruption of fluvial stability by using
more holistic approaches to reducing sediment runoff, protecting water quality, and providing water
treatment and drainage control. BMPs may be used singly or in combination with sedimentation ponds to
control and minimize erosion and sedimentation from disturbed areas, thereby reducing the adverse
hydrologic impacts associated with the predominant use of sedimentation ponds.
8.2.2 Potential Benefits Categories
EPA identified two categories of benefits associated with the proposed subcategory: ecological benefits and
economic productivity benefits. Ecological benefits result from improvements to habitats, ecosystems, or
general areas affected by an effluent or disturbed surface area. Although some ecological benefits will
have positive impacts on recreational use values (e.g., recreational fishing, hunting, wildlife viewing, etc.),
others are more likely to fall under the traditional nonuse benefit categories. Ecological benefits from
implementation of the proposed rule have two components:
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• Land-related benefits: The potential land-related benefits arise from the reduced
disturbance of land area, increased soil conservation, and improved vegetation density.
Use of BMPs will reduce the land area disturbed, resulting in terrestrial habitat
protection and improvements in aesthetic quality. In addition, implementation of BMPs
enhances soil conservation and promotes vegetation growth and development within
reclamation areas. Enhanced vegetation cover improves terrestrial habitats and attracts
wild life, potentially resulting in increased species abundance and diversity in the affected
areas.
• Water-related benefits: The potential water-related benefits arise from the preservation
of natural stream flows. Sedimentation ponds reduce flows to streams and underground
systems that feed surface waters, thereby reducing natural habitats for riparian and
aquatic species and disturbing natural drainage settings. Ponds also reduce sediment
delivery downstream. In arid/semiarid western coal mining regions, climate, topography,
soils, vegetation and hydrologic components all combine to form a hydrologic balance
that is naturally sediment rich. Eliminating sediment delivery is likely to disturb dynamic
fluvial systems that depend upon a continual source and flow of sediment.
Implementation of BMPs can preserve a more natural sediment delivery. Improved
hydrological balance and an increase in water quantity is likely to have positive effects
on aquatic and riparian life habitats. The use component of water-related ecological
benefits is likely to be insignificant, however, because many of the water bodies affected
by mining drainage are intermittent and ephemeral in nature and do not support water-
based recreation.
Implementation of the proposed subcategory may also generate economic productivity benefits. Because
construction and operation of sedimentation ponds has the potential to reduce the amount of surface
runoff available for downstream users, an increase in the quantity of water available for downstream
users is one of the most important benefits of BMP systems. For example, economic productivity gains
are expected to occur through improved supply of irrigation water for agricultural uses, municipal
drinking water, and industrial cooling water. Another possible economic productivity benefit from BMP
implementation is improved post-mining land use. In the arid/semiarid western United States, livestock
grazing is normally a part of the post-mining land use. Improved vegetation density resulting from
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implementation of BMPs is likely to increase productivity of the rangeland used for livestock grazing, and,
as a result, to increase the value of land for post-mining land uses.
8.2.3 Methodology and Results
This section describes the methodologies EPA used to quantify and monetize the benefits associated with
the proposed subcategory. EPA extrapolated from the WCMWG model mine analysis and industry profile
information to estimate the environmental improvements attributable to the proposed subcategory
(WCMWG, 1999a). EPA developed monetary estimates of these environmental impacts using the benefits
transfer techniques described below.
Land-Related Benefits
EPA's analysis of land-related benefits involves the following three steps:
(1) Estimate acres expected to avoid disturbance. Adopting the proposed subcategory is expected
to reduce surface disturbance area. EPA estimated the number of avoided disturbance acres using
the following assumptions: (1) on average, a sedimentation pond is required for every 127 acres of
reclaimed land; (2) on average, a sedimentation pond disturbs 12.2 acres of land; and (3) the total
annual surface disturbance from the 46 surface coal mines is 17,480 acres.23 Using the formula
below, EPA estimates that 1,679 acres of disturbance would be avoided each year under the
proposed subcategory.
23 Assumptions 1 and 2 are based on information contained in Section 4.2.1 of the WCMWG
model mine analysis (WCMWG, 1999a).
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TAAD = (TASDIU1 acres) x Pond Size
where:
TAAD = total annual avoided disturbance area (acres);
TASD = total annual surface disturbance area (17,480);24
Pond Size = average area disturbed per sedimentation pond (12.2 acres).
To value avoided disturbance area, EPA estimated a range of benefits associated with enhanced
hunting opportunities stemming from improved wildlife habitat using benefits transfer from two
wildlife habitat valuation studies.
A study by Feather et al. (1999) provides a lower-bound estimate. The study develops a
recreational demand model for pheasant hunting, where demand is modeled as a function of
pheasant habitat characteristics, including a measure of undisturbed surface area at hunting sites.
Undisturbed surface cover is regarded as a critical habitat characteristic because it provides good
nesting cover, insects for newly hatched chicks, and winter cover. The study estimated the annual
hunting benefits from increased availability of undisturbed open space at $0.37 ($1998) per acre in
the Pacific/Mountain region.25
A study by Scott et al. (1998) estimating various components of the natural shrub-steppe habitat
value provides an upper-bound estimate of recreational hunting benefits. The study uses a WTP
value for hunting shrub-steppe-dependent game birds to estimate a recreational element of the
land preservation value. Data yielded an aggregate estimate of annual WTP of $8.2 million
(1998$) for game bird hunting in the study area, which has approximately 565,498 acres of land
24 This calculation is described earlier in Section 4.2.3 on page 4-10. Information on surface
disturbance for 26 surface mines provided by the WCMWG is used to calculate annual surface
disturbance. An average surface disturbance per mine per year was calculated by dividing the expected
total surface disturbance for each mine by the expected life of the mine. These values are averaged over 26
mines. The estimated average surface disturbance per mine per year is 380 acres. This estimated average
surface disturbance was used to estimate annual surface disturbance for the 20 sites for which WCMWG
did not provide information. Summing the estimates of annual surface disturbance over the 46 surface
western mines results in an annual surface disturbance of 17,860 acres.
25EPA adjusted the 1992 study value of $0.33 using the change in the Consumer Price Index from
1992 to 1998, yielding an estimate of $0.37 in 1998 dollars.
-------
available for upland bird hunting. Dividing the aggregate WTP value by the estimate of bird
habitat acreage yields an estimate of $6.00 (1998$) per acre per year. EPA adjusted this value
according to the number of hunting licences sold in the states affected by western surface coal
mining,26 resulting in an annual per acre value of $2.46 (1998$).27
(2) Estimate of Increased Soil Conservation. The results from the WCMWG model mine analysis
demonstrate that the proposed subcategory is expected to promote soil conservation compared to
undisturbed conditions. The weighted average soil loss rate for the undisturbed slopes and slope
segments is 4.7 tons per acre per year; the weighted average soil loss rate for the post-mining
model mine reclamation area under the proposed subcategory is 3.0 tons per acre per year. This
difference represents a net change in estimated average soil loss rate of 1.7 tons per acre per year
from the undisturbed to post-mining reclaimed conditions. The soil loss rates for the reclaimed
area under the existing guidelines and proposed subcategory are essentially the same, since the
types and applications of slope stabilizing alternate sediment controls remains similar between
them. Therefore, EPA did not estimate soil conservation benefits.
(3) Estimate of Improved Vegetation. Arid/semiarid reclaimed plant communities tend to have
relatively low vegetation cover and productivity, particularly where annual rainfall is less than 9
inches per year. Total vegetation cover values frequently fall within the range of 5 percent to 20
percent. Yearly vegetation production tends to be low, with most reclaimed areas producing
between 500 and 1,000 pounds per acre annually. Increased focus on the use of BMPs would
enhance vegetation growth and community development on reclaimed lands compared to the
existing effluent guidelines. Typical vegetative cover in this area is only 5% to 20%. Vegetative
cover in a constructed drainage area (which is included in the model mine system) can be 25% or
more in absolute value. Thus, at least a 5% increase is expected for the drainage area (WCMWG,
1999a, Section 4.2.2).
Individual plant and vegetation community development is holistically linked to all of the factors in
the environment that influence plant germination, establishment, and growth. The WCMWG
26Hunting licence data are obtained from the 1996 National Survey of Fishing, Hunting, and
Wildlife Associated recreation.
27Detailed calculations are contained in the Benefits Assessment (U.S. EPA, 2000a).
8-14
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model mine analysis indicates that the cumulative effect of BMPs can produce a synergistic benefit
to plant growth that favorably influences vegetation production. The most significant effects that
may promote an increase in vegetation density are summarized below:
• Improved soil moisture availability;
• Decreased soil detachment and erosion;
Enhanced nutrient retention and availability; and
Increased plant species diversity resulting from the use of a diverse seed mixture in the
reclamation process.
However, the WCMWG model mine analysis does not quantify changes in vegetation cover, and,
as a result, EPA did not quantify or monetize benefits from enhanced vegetation cover for the
proposed subcategory.
As shown in Table 8.2, the expected land benefits from the proposed subcategory that could be monetized
are small, most likely ranging from $5,500 to $36,500. However, the monetized value does not include a
number of benefit categories, most notably nonuse ecological benefits that may account for the major
portion of land benefits.
Table 8-2: Annual Land Related Benefits from Western Alkaline Coal Mining Subcategory
Benefit Category
Physical Measure
Per Acre Value
($1998)
Total Value1
1. Avoided surface disturbance
2. Increased soil conservation
3. Improved vegetation
Decreases by 1,679
acres/year
Negligible
Vegetative cover
Increases by 5%
$0.37
to
$2.47
Not available
$5,500
to
$36,500
Not estimated
Total Monetized Land Benefits (1998$)
$5,500
to
$36,500
'Numbers have been rounded to the nearest $500.
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Water-Related Benefits
Implementation of the proposed subcategory is expected to yield water-related benefits to society by
improving hydrologic and fluvial stability in the watersheds affected by reclamation areas. EPA believes
that the use of BMPs will minimize disruptions to the hydrologic balance. Blockage of natural surface flow
would be minimized through establishment of a natural flow pattern from the reclamation area, and passage
of undisturbed area drainage through the reclaimed area in stable channels, essentially uninterrupted, to the
undisturbed watershed downstream.
The WCMWG model mine analysis was used to characterize the increase in runoff delivered to the
drainage area below the reclamation area. The model predicts that approximately 73 acre-feet of water
would be released downstream from the example reclamation watershed as a result of the receipt of a
10-year, 24-hour precipitation event under the proposed subcategory. This represents a 49 percent increase
in drainage volume over the existing guidelines for this watershed, and is similar to the 80 acre-feet of
drainage volume from the pre-mining undisturbed watershed scenario.
EPA estimated benefits from improvements in water quantity using benefits transfer from a study by
Crandall et al. (1992). The study estimates the recreational value of instream flows that are considered
adequate for supporting abundant streamside plants, animals, and fish. The estimated user value of an
improvement in riparian quality from intermittent to perennial with the associated enhancement in plant and
animal habitat and animal species diversity is $81.25 (1998$).28 EPA applied this value to water-based
recreation consumers residing in the counties affected by western alkaline coal mining operations
discharging or affecting water bodies with perennial flow.29
Seven perennial streams located in six counties are currently affected by western alkaline coal mining
operations. The number of recreational users residing in these counties are estimated to be equal to the
percent of the population engaged in near-water recreational activities (i.e., including activities such as
wildlife viewing but excluding fishing). EPA found no evidence that fishing occurs in water bodies
28EPA adjusted the study value of $65 (1990$) to 1998 dollars using the relative change in CPI
from 1990 to 1998(1.25).
29For detail on drainage features associated with Western Alkaline Coal Mining Subcategory
mines, see Table F-3 in Appendix F of the Coal Remining and Western Alkaline Mining: Economic and
Environmental Profile (U.S. EPA, 1999e).
-------
affected by the proposed subcategory, and thus assumed that benefits from improvements in fishing are
negligible. Information in EPA's Reach File 1 indicates that the ratio of affected reach length to the total
number of reach miles within a county ranges from 0.02 to 0.39. This analysis assumes that recreation
activity among residents of the counties affected by western mining is distributed evenly across all reach
miles within those counties. Accordingly, EPA estimates that 2% to 39% of users within the county are
affected. The average ratio of reach length to the total number of reach miles within a county is 0.06.
Annual water-related benefits are equal to the affected population multiplied by $81.25 per user. In this
analysis, EPA assumed that riparian and ecological improvements expected to occur in perennial water
bodies as a result of natural flow preservation from improved hydrological stability are similar to
improvements in riparian habitat described in Crandall et al. (1992).
EPA estimated the monetized value of recreational benefits from improved water flow by applying the
WTP value for water flow preservation to water-based recreation consumers residing in the counties
affected by western alkaline coal mining operations discharging to water bodies with perennial flow. EPA
identified six counties, involving approximately 900 users, affected by western mining and containing the
relevant drainage features. The estimated monetary value of recreational water-related benefits ranges
from $25,000 to $488,000 per year.
Nonuse Benefits
Individuals who never visit or otherwise use a natural resource may nevertheless be affected by changes in
its status or quality. Empirical estimates indicate that such "nonuse value" may be substantial for some
resources (Harpman et al., 1993; Fisher and Raucher, 1984; Bergstrom, 1993). Because nonuse value is a
sizable component of the total economic value of water resources, EPA estimated change in nonuse values
using a rule of thumb developed by Fisher and Raucher (1984). For this analysis, EPA estimates that
nonuse benefits are equal to one-half of water-related recreational benefits. This yields a range of nonuse
benefits attributable to the Western Alkaline Coal Mining Subcategory of $12,500 to $244,000 per year.
The nonuse benefit rule of thumb method is based on water-related recreation benefits and is therefore not
applied to land-related benefits.
-------
Total Annual Benefits
EPA estimated expected benefits for the proposed subcategory in terms of land-related benefits and water-
related benefits. Summing the monetary values reported in the preceding sections across these two
categories results in total monetized benefits per year of $43,000 to $768,500 for the proposed
subcategory, as shown in Table 8.3.
Table 8-3: Total Monetized Benefits for the Western Alkaline Coal Mining Subcategory
Benefit Categories Annual Benefit Values (1998S)1
Low High
Avoided Surface Disturbance $5,500 $36,500
Recreational Benefits from Improvements in Water Flow $25,000 $488,000
Nonuse Benefits $12,500 $244,000
Total Benefits $43,000 $768,500
'Numbers have been rounded to the nearest $500.
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Chapter 9
Social Costs and Benefits of the Proposed Rule
9.0 Introduction
This chapter summarizes the total estimated social costs and benefits of the two proposed subcategories.
The estimated social costs include industry compliance costs and the costs incurred by NPDES permitting
authorities to implement the proposed rule. The benefit estimates presented reflect only those benefit
categories that EPA was able to quantify and monetize. However, benefit categories that EPA was not able
to quantify and/or monetize are briefly reviewed. The chapter also examines assumptions, exclusions, and
uncertainties in the economic impact analysis, and where possible, indicates the direction of their potential
bias on the estimated costs and benefits.
9.1 Social Costs and Benefits of the Proposed Coal Remining
Subcategory
The previous chapters of this report provide detailed information on the Agency's cost and benefits
analyses for the proposed rule. This section summarizes the results of the analyses for the proposed Coal
Remining Subcategory. Table 9-1 presents EPA's estimate of the total annual social costs and benefits
attributed to the proposed Subcategory.
9-1
-------
Table 9-1: Annual Social Costs and Benefits of the Proposed Coal Remining
Subcategory ($1998)
Social Costs (Discounted at 7%):
Industry Compliance Costs:
Additional BMP Effort $199,500 - $565,000
Monitoring Costs $133,500 - $193,500
Costs to NPDES Permitting Authorities: $47,500 - $67,500
Total Social Costs $380,500 - $825,500
Monetized Benefits (Discounted at 3%):
Recreational Use of Improved Water Bodies $ 100,500 - $ 168,000
Aesthetic Improvements to Water Bodies $380,000 - $635,500
Recreational Use of Reclaimed Land $202,000 - $286,000
Nonuse (related to improved water bodies) $51,500 - $86,000
Total Monetized Benefits: $734,000 - $1,175,500
Note: Totals may not add due to rounding
EPA projects that states will permit 43 to 61 new remining sites each year under the proposed subcategory.
Based on this projection, EPA estimates annual industry compliance costs in the range of $333,000 to
$758,500. This estimate includes potential costs associated with increased BMP effort (i.e., pollution
abatement plan costs) and additional monitoring. Estimated annual costs to NPDES permitting authorities
are between $47,500 and $67,500. The estimated total annual social cost of the proposed subcategory
ranges from $380,500 to $825,500.
The total monetized benefits range from $734,000 to $1,175,500. Between 72 and 76 percent of the total
monetized benefits ( $532,000 to $889,500) result from projected improvements to water bodies. Of the
water-related benefits, 71 percent ($380,000 to $635,500) reflects the value of aesthetic improvements to
water bodies, 19 percent ($100,500 to $168,000) reflects water-related recreational benefits, and the
remainder ($51,500 to $86,500) reflects nonuse benefits. Estimated land-related benefits result from
improved recreation on reclaimed lands, including hunting and wildlife-viewing, and account for 24 to 28
percent of the total monetized benefits ($202,000 to $286,000).
9-2
-------
In addition to the benefits EPA was able to monetize, the projected increase in remining is expected to
result in the removal of approximately 216,000 to 307,000 feet of highwall each year, resulting in
substantial benefits associated with increased public safety. Furthermore, increased remining has the
potential to recover and utilize coal resources that might otherwise remain unrecovered. Other benefit
categories that EPA was not able to monetize include health and safety benefits, nonuse benefits related to
reclaimed land, potential savings in drinking water treatment costs, and secondary economic impacts from
increases in tourism and recreation.
Table 9-2 provides an overview of the assumptions, exclusions, and uncertainties in EPA's economic
impact analysis, and where possible, indicates the direction of their potential bias on the estimated costs
and benefits. Uncertainties result from the fact that the subcategory will apply to new remining permits for
sites with unknown characteristics.
Table 9-2: Assumptions, Exclusions & Uncertainties in Estimated Coal Remining Subcategory Costs and
Benefits
Omission/Uncertainty
Uncertainty about the number and characteristics of sites that
will be remined under the proposed subcategory
Assumption that remining sites in Illinois, Indiana, and
Tennessee will require 12 baseline samples and flow weirs
Assumption that monthly compliance monitoring will be
required
Estimate of four discharge points per mine site requiring
monitoring
Assumption that alkaline addition will be required for 10 %
of surface and underground remining sites
Health and safety improvements excluded
Land-related nonuse benefits excluded
Savings in drinking water treatment costs excluded
Indirect or secondary economic impacts (e.g., new
industry /business to support increases in tourism and
recreation) excluded
Likely Impact
on Estimated Costs
?
+
?
?
?
Likely Impact
on Estimated
Benefits
?
-
-
-
—
9-3
-------
Table 9-2: Assumptions, Exclusions & Uncertainties in Estimated Coal Remining Subcategory Costs and
Benefits
Omission/Uncertainty
Possible differences in environmental characteristics of pre-
existing discharges between benefits transfer study sites
(mostly sediment) and future remining sites (AMD)
Potential that remined AML sites have undergone some
natural reclamation.
Significant decreases in AMD loads not correlated with
immediate improvements in surface water quality
All reclaimed acreage is expected to provide improved
hunting, fishing and wildlife viewing opportunities (the
relative value of other land uses may be higher or lower than
the value associated with recreation)
Likely Impact
on Estimated Costs
Likely Impact
on Estimated
Benefits
?
+
+
?
+ may overstate costs or benefits - may understate costs or benefits ? likely effect unknown
9.2 Social Costs and Benefits of the Proposed Western Alkaline Coal
Mining Subcategory
The previous chapters of this report provide detailed information on the Agency's cost and benefits
analyses for the proposed rule. This section summarizes the results of the analyses for the proposed
Western Alkaline Coal Mining Subcategory. Table 9-3 presents EPA's estimate of the total annual social
costs and benefits attributed to the proposed Subcategory.
9-4
-------
Table 9-3: Annual Social Costs/Savings and Benefits of the Proposed Western
Alkaline Coal Mining Subcategory ($1998)
Social Costs (Discounted at 7%):
Compliance Costs (Savings):
Incremental Modeling Costs $327,500
Sediment Control Costs (Savings) ($30,835,000)
Earlier Phase 2 Bond Release ($349,000 - $ 511,500)
(Savings)
Costs to NPDES Permitting Authorities: $ 12,500
Total Social Costs (Savings) ($30,845,000 - $31,007,000)
Monetized Benefits (Discounted at 3%):
Avoided Surface Disturbance $5,500- $36,500
Recreational Benefits from Improved $25,000 - $488,000
Water Flow
Nonuse Benefits $12,500 - $244,000
Total Monetized Benefits: $43,000 - $ 768,500
Note: Totals may not add due to rounding
The proposed Western Alkaline Coal Mining Subcategory is projected to result in substantial industry cost
savings while creating environmental benefits for society. EPA believes that the only incremental industry
compliance costs attributed to the proposed Subcategory is associated with the watershed modeling
requirements, estimated to be approximately $327,500 per year. These costs would be offset by reduced
sediment control costs associated with implementing the proposed sediment control plans (an estimated
savings of approximately $30.8 million) and savings resulting from an expected reduction in the
reclamation bonding period (an estimated savings of $349,000 to $511,500). EPA estimates that the
annual cost to NPDES permitting authorities to implement the proposed Subcategory will be approximately
$12,500, resulting in a total annual social cost savings of approximately $31.0 million.
The proposed Western Alkaline Coal Mining Subcategory is also expected to result in environmental
benefits. Total monetized benefits range from $43,000 to $768,500 per year. The majority of the
monetized benefits ($37,500 to $732,000) results from improved water flow that will preserve perennial
water bodies affected by western coal mining operations. The improved flow is expected to result in
9-5
-------
benefits to water-based recreation consumers ($25,000 to $488,000), and in water-related nonuse benefits
($12,500 to $244,000). Land-related benefits of $5,500 to $36,500 result from reduced disturbance of
land areas. EPA estimated the value of enhanced hunting opportunities associated with the undisturbed
lands, but was not able to monetize other land-related benefits. Categories of benefits that EPA was not
able to monetize include land-related ecological benefits, the benefits of increased vegetative cover, and
possible recreational fishing benefits.
Table 9-4 provides an overview of the assumptions, exclusions, and uncertainties in EPA's economic
impact analysis, and where possible, indicates the direction of their potential bias on the estimated costs
and benefits.
Table 9-4: Assumptions, Omissions & Uncertainties in Estimated
Western Alkaline Coal Mining Subcategory Costs and Benefits
Omission/Uncertainty
Assumption that sediment control costs per acre and impacts
on loadings and vegetation for the model mine are
representative for all western surface mines
Assumption that all surface coal mines will incur
incremental modeling costs of $50,000
Assumptions about the cost of performance bonds and the
effect of the subcategory on the timing of Phase 2 bond
release
Ecological nonuse benefits not included for land-related
benefits
Benefits of increased vegetative cover not monetized
Recreational fishing benefits excluded
Recreational benefits from water quality improvements
consider resident users only
Recreational benefits from water quantity improvements
assume that perennial stream flows are preserved
Unknown recreational importance of the affected sites
Sites for which information on drainage features is not
available excluded from water-related benefits analysis
Likely Impact
on Estimated Costs
?
+
?
Likely Impact
on Estimated
Benefits
?
-
-
-
-
+
?
-
may overstate costs or benefits - may understate costs or benefits ? likely effect unknown
9-6
-------
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Avenue, Alexandria, VA 22304.
Western Coal Mining Work Group (WCMWG). 1999c. Technical Information Package: Western
Alkaline Mining Subcategory. Details available from the U.S. EPA Sample Control Center, operated by
DynCorp I&ET, 6101 Stevenson Avenue, Alexandria, VA 22304.
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Appendix A
State Remining Programs
Many states have been delegated authority under SMCRA and NPDES programs, and several states have
established or are developing remining programs. State remining permit terms and conditions must adhere
to provisions established in the SMCRA regulations, except where these provisions are modified by the
state and approved by the Secretary of the Interior. This appendix presents selected information on state
remining programs and provides an overview of current state monitoring requirements for coal remining
sites.
A.1 State Programs
Pennsylvania
The Commonwealth of Pennsylvania has a particularly active remining program. Pennsylvania provides a
single application that covers both SMCRA and NPDES requirements. Under remining regulations that
were approved by OSM and EPA in March 1986, Pennsylvania establishes best professional judgement
(BPJ) limits for pre-existing discharges. Bond release is contingent on the post-mining discharge having
pollutant levels equal to, or less than, the pre-remining baseline. Pennsylvania has formalized and
standardized the permit process using a series of worksheets, modules (the REMINE program developed by
EPA and researchers at Pennsylvania State University), and forms to allow efficient processing of remining
applications. Applicants must provide data on baseline water quality and quantity sufficient to characterize
baseline pollutant levels, and must develop a pollution abatement plan that is integrated with the mining and
reclamation plan. The permitting authority establishes baseline limits for acidity, iron and manganese
based on a BPJ analysis.
Pennsylvania also has an incentives program for remining operators. The Remining Operator's Assistance
Program (ROAP) provides subsidies to eligible operators for the initial land surveying and bonding
requirement costs. The party responsible for creating the abandoned mine land cannot be an eligible
operator. Subsidies include payments to a qualified consultant to:
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(1) Assess existing resources within the area adjacent to the proposed remining area that may be
affected by surface mining activities;
(2) Collect and report general hydrological information of the proposed remining area;
(3) Prepare a statement of results of test borings or core samples; and
(4) Provide a detailed plan of the proposed surface coal mining activities.
Subsidies may also be used to meet operator bonding obligations. Operators must reimburse the
Commonwealth for the cost of the services performed if they do not meet their obligations as described in
Title 25 of the Pennsylvania Code for Environmental Protection section 86.270 (relating to operator
liability). As of July 1999, Pennsylvania had permitted 343 remining operations, including 300 Rahall-type
permits.
Kentucky
Kentucky has a remining program similar to Pennsylvania's. Kentucky's permitting program requires
applicants to submit baseline monitoring data and an abatement and reclamation plan. In addition,
applicants may submit results from the REMINE program. The applicant must demonstrate that remining
operations have the potential to improve water quality. The permit limits are based on BPJ analysis.
While Kentucky's program is meant to create incentives for the reclamation of AML in general, it offers
particular incentives for small mine operators. Under the Kentucky Revised Mining Statutes, small mine
operators are subsidized for at least 20 percent of the initial surveying and planning costs of remining
AML. In the event that no bids are submitted by small coal operators, these funds may be transferred to
the public. The State of Kentucky also provides bonding assistance to any applicant who obtains an
approved remining permit. Under this assistance program, the Bond Pool Commission may provide
coverage to mine operators for up to 50 percent of the bond amount determined necessary to ensure
reclamation of the remined area. The state also imposes lower bonding requirements for eligible remining
sites: there is a two year bonding period for remining, and the base bond rate for remining areas is $1,500
per acre instead of the $2,500 per acre rate that normally applies (Kentucky Department for Surface
Mining Reclamation and Enforcement, 1998).
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Alabama
According to OSM's Annual Evaluation Summary Report for Alabama, many coal mine operators are
combining remining of AML acres with regular coal mining. Sixteen of 21 permits issued by the state
between October 1996 and September 1998, and 5 of 6 permits issued between October 1998 and April
1999, involved some remining of AML acres. OSM provided assistance to the state by presenting
information on the national remining initiative and the regulatory authorities affecting remining, and by
encouraging interest in expanded remining. OSM is discussing the potential for a working partnership of
the coal industry, the state regulatory authority, and OSM to discuss issues that would encourage
additional remining in the state (U.S. DOI, 1999c).
Tennessee
OSM has implemented the SMCRA regulatory program in Tennessee since the state repealed its surface
mining law in October 1984. The Knoxville Field Office of the OSM formed a remining team in May
1996. The Team solicited remining initiatives from industry, the environmental community, and regulators.
The State has recently begun working with industry and OSM on a case by case basis to modify effluent
limitations requirements for remining sites (U.S. DOI, 1998d).
West Virginia
West Virginia's NPDES permitting requirements include the Rahall provisions which allow for modified
effluent limits in remining permits based on Best Professional Judgement (BPJ). Monitoring of baseline
conditions for at least 12 months is required, and the BPJ limits cannot exceed levels of pH, iron and
manganese in pre-existing discharges (U.S. DOI, 1998e).
Maryland
The majority of coal that was surface mined in Maryland during the period October 1998 to September
1999 was recovered from remining operations. Maryland promotes remining and issued a Reclamation
Advisory to all coal operators in Maryland in March 1999 outlining remining benefits and incentives to the
coal mining industry. The Maryland remining program includes a variety of incentives, including bond
credits, reduced bond liability period, excess spoil disposal on AML, and Rahall-type modified effluent
limitations for pre-existing discharges (U.S. DOI, 2000).
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A.2 Summary of State Sampling Requirements
The IMCC solicitation collected information on twenty states' remining programs (IMCC, 1999). As of
July 1999, seven of the twenty states responding (Alabama, Kentucky, Maryland, Ohio, Pennsylvania,
Virginia and West Virginia) had issued Rahall permits, and another four states (Illinois, Indiana, Missouri,
and Tennessee) had issued non-Rahall remining permits. Pennsylvania had issued by far the greatest
number of Rahall permits (300), followed by Alabama (10).
EPA collected information on the state monitoring requirements for remining operations in the seven states
that have issued Rahall permits to characterize the regulatory baseline for the proposed subcategory. Table
A.I lists the current State monitoring requirements for both Rahall and non-Rahall permits in each of these
states.
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Table A.1: State Sampling Requirements: Rahall vs. Non-Rahall Sites
State
Alabama
Kentucky
Maryland
Ohio
Pennsylvania
Virginia
West Virginia
Baseline Monitoring During Mining Post-Mining
Requirements
Rahall
6 monthly
samples
6-12 monthly
samples +
Biological
Assessment
12 monthly
samples
12 monthly
samples
12 monthly
samples
12 monthly
samples
Twice monthly
for 12 months
Non-Rahall Rahall
6 monthly Monthly
samples
None 2 per month
6 monthly Monthly
samples
6 monthly Quarterly
samples
6 monthly Monthly
samples
6 monthly Biweekly
samples
2 per month
Non-Rahall Rahall
Monthly Monthly, for at least one year,
typically at Phase II Bond
Release (2 yrs.)
2 per month 6 months + biological
Quarterly Monthly, for at least one year
Quarterly Quarterly until Phase III
Quarterly Monthly, for at least one year,
typically at Phase II Bond
Release (2 yrs.)
Biweekly Monthly, for at least one year,
typically at Phase II Bond
Release (2 yrs.)
2 per month 12 consecutive months of
semi-monthly samples after
Phase I Bond Release
Non-Rahall
Monthly, for at least one year,
typically at Phase II Bond
Release (2 yrs.)
2/month until Phase I; 6
months of monthly; then
quarterly until Phase III
Quarterly
Quarterly until Phase III
Quarterly
Monthly, for at least one year
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Appendix B
AML Reclamation Program
B.1 AML Reclamation Program and Fund
Title IV of SMCRA established the AML Reclamation Program in response to concern about extensive
environmental damage caused by past coal mining activities. The program is funded primarily from a fee
collected on each ton of coal mined in the country. The fee is deposited into a special fund, the Abandoned
Mine Land Fund, and is appropriated annually to address abandoned and inadequately reclaimed mining
areas where there is no continuing reclamation responsibility by any person under state or federal law.
Mine operators must make fee payments quarterly and accompany them with a statement reporting the
amount and type of coal mined during the quarter. The per ton fee schedule is as follows:
• 35 cents for coal produced by surface coal mining;
• 15 cents for coal produced by underground mining; and
• 10 cents for lignite coal.
While the program was initially slated to run from 1977 to 1992, Congress has reauthorized the tax to
generate AML funds through 2004. Even with this extension, OSM has estimated that only 10 percent of
AML problem areas will be corrected over the life of the reclamation program. According to estimates in
the Abandoned Mine Land Inventory System, the most serious AML problems ~ those identified as Priority
1 or Priority 2 sites — would cost more than 2.6 billion dollars to reclaim. These include highwalls, open
shafts and accessible underground mines presenting a danger to human health, safety and welfare. Many
other AML sites ~ Priority 3 sites that do not pose the same degree of danger to the public but that do
adversely affect the environment ~ would cost tens of billions dollars more to correct.
There is very little likelihood that enough AML money will be available to fund all the reclamation of even
the most serious of the eligible sites, let alone the eligible sites with only environmental impacts. Programs
that encourage remining have the potential to address some of the AML problems without spending public
funds.
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B.2 AMLIS
As described in Chapter 2, the Office of Surface Mining (OSM) reports information on Abandoned Mine
Land (AML) in the Abandoned Mine Land Inventory System (AMLIS) database. AMLIS presents data
collected by OSM program officials, States and Tribes on lands and waters adversely affected by past
mining (primarily coal mining) that are eligible for reclamation under the Abandoned Mine Reclamation
Fund. The database is updated as new problems are identified and as existing problems are reclaimed.
States are required to inventory only AML with Priority 1 and Priority 2 problems ~ those that pose threats
to health, safety and the general welfare of people. Reporting on lower priority sites (those that pose
environmental problems (Priority 3) or that involve public facilities or the development of publicly-owned
land (Priority 4 or 5)) is voluntary and hence may not be complete.
The "problem area" is the primary geographic unit reported in AMLIS. Problem areas are classified by
priority and by "problem type." A problem area may have more than one problem type, but each problem
type is reported only once for each problem area. There were 31,887 problem area/problem type
combinations in AMLIS as of February 1999. Of these totals, only a subset are coal mining sites with pre-
existing discharges that have not yet been remediated or funded for reclamation. These sites are potentially
affected by the proposed subcategory. Of the total reported in AMLIS, 7,966 problem areas (covering
368,803 acres and reporting 18,426 problem types) are coal mining sites for which some or all problems
are not yet reclaimed or funded for reclamation. Of these, 2,188 problem areas (covering 55,352 acres)
have some type of water quality problem. EPA's analysis of the AMLIS data included AML with the
following problem types as sites with water quality problems: clogged streams; clogged stream lands;
hazardous water body; polluted water body: agricultural or industrial use; polluted water body: human
consumption; and water problem.
The following are definitions of these and other AMLIS problem types:
Priority 1 and 2 Problem Types
Clogged Streams Lands. Any AML-related pile, bank, mine waste, or earth material distributed by mining
activity which could be eroded and carried downstream by surface runoff. Clogged stream lands are
measured in acres of land affected by spoil, mine waste and earth material that are directly contributing to
the clogged streams. Those piles and banks which are identified and included as other AML problem types,
such as dangerous highwalls, are not included in this problem type.
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Clogged Streams. A filled stream bed, usually in a narrow valley, with AML-originated silt and debris
carried downstream by surface runoff. This causes reduced carrying capacity of the stream resulting in a
danger to property and human health, safety and welfare. Clogged streams are measured in miles of
streams that must be dredged to abate the problem.
Dangerous Highwalls. Any unprotected, unreclaimed highwall located in close proximity to a populated
area, public road, or other area of intense visitation, which poses a threat to the public health, safety and
general welfare.
Dangerous Impoundments. Any AML-related, large-volume water impoundments such as mine waste
embankments, sedimentation ponds, or underground mine water pools which pose a threat of flooding and
catastrophic destruction to downstream property and human health, safety and general welfare.
Dangerous Piles or Embankments. Any AML-related waste pile or bank located within close distance to a
populated area, public road, or other area of intense visitation, and posing a danger to public health, safety
and general welfare by adverse effects resulting from an unstable steep slope or wind-blown particulate
matter.
Dangerous Slides. A land mass slide of surface-subsurface soil, a mine waste pile or bank, or surface
mine spoil that, due to instability of its own weight or lubricating effects of mine drainage water, endangers
the public or threatens destruction of improved property located uphill or downhill from the land mass.
Gases: Hazardous or Explosive. Any AML-related venting of hazardous or explosive gases. Includes
hazardous or explosive gases problem areas unrelated to underground mine fires.
Hazardous Equipment or Facilities. Dilapidated hazardous equipment or facilities located within close
proximity of populated areas, near public roads, or other areas of intense visitation.
Hazardous Water Body. Impounded water, regardless of depth or surface area, that is considered an
attractive nuisance and is located within close proximity to a populated area, public road, or other areas of
intense visitation. The hazard must result from some AML-related feature(s) such as steep or unstable
banks, hidden underwater ledges, or rocks or debris on the bottom.
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Industrial or Residential Waste. Unauthorized use of AML-impacted areas for residential or industrial
waste disposal that poses a danger to the public from unsanitary conditions or from the toxic emissions
from burning refuse.
Polluted Water Body: Human Consumption or Agricultural and Industrial Use. Surface or subsurface
water used for either direct human consumption, or agricultural, industrial or recreational purposes which
does not meet the standards (especially those for suspended solids, acid or alkaline conditions, heavy metals
concentrations, or radioactivity) appropriate to the historical use.
Portals. Any AML-related surface entrances to a drift, tunnel, adit or entry which is not sealed or
barricaded and is posing a threat to the public.
Subsidence. Any surface expression of subsidence such as tension cracks, troughs, shearing faults, or
caving caused by AML-related underground mine voids which may damage property and endangers the
public.
Surface Burning. The continuous combustion of mine waste material resulting in smoke, haze, heat, or
venting of hazardous gases which is currently occurring or demonstrated to occur on a regular basis.
Burning in a mine dump, even if beneath the surface of the material, is also considered surface burning.
Underground Mine Fires. The continuous combustion of underground mine waste material resulting in
smoke, haze, heat, or venting of hazardous gases which pose a danger to the public.
Vertical Openings. Openings which typically occur when subsidence results in a vertical or steeply-
inclined shaft, isolated pothole or opening which is not sealed or barricaded and that poses a threat to
public health, safety and general welfare.
Priority 3 Problem Types
Bench. A ledge that forms a single level operation along which mineral or waste material are excavated.
The portion of a bench formed on solid, unexcavated material is considered a solid bench, and the portion
which consists of unconsolidated spoil material extending outward from the solid bench is considered a fill
bench.
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Industrial or Residential Waste Dump. An area used to dispose of any kind of industrial or residential
waste not related to mining or processing.
Gob. Refuse or waste removed from a mine. This includes mine waste, rock, pyrites, slate or other
unmarketable material which is separated during the cleaning process.
Highwall. The face of exposed overburden or the face or bank on the uphill side of a contour strip mine
excavation or the vertical wall consisting of the deposit being mined and the overlying rock and soil strata
of the mining site.
Haul Road. A heavy built road which runs from pit to loading dock, tipple ramp or preparation plant and
is used for transporting mined materials.
Pit. The last uncovered cut adjacent to the highwall. In surface mining, the working area may be known as
a strip pit, and mine workings or excavations open to the surface are also termed pits.
Spoil Area. The overburden material removed in gaining access to a coal seam or mineral deposit.
Slurry. A fine particle-size material from coal or mineral processing stored in a pond. This solid must be
separated from the water in order to have clear effluent for refuse or discharge.
Slump. A surface expression resulting from the caving in of underground mine voids.
Equipment and Facilities. Any equipment or buildings used to mine, process or transport coal or mineral
ores.
Mine Openings. Any surface entrance or opening related to an underground mine excavation.
Water Problem. When water leaving the AML problem area causes a negative environmental impact
because of its pH, sediments load, or other pollutants, or because of its effect on other lands due to poor
drainage conditions (i.e., agricultural flooding).
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