Costs of Strip Mine Reclamation in the West

X HT 3f^ 6? ,^î\y United States '" ' '" Department of Agriculture Costs of Strip Mine Economics, Statistics, and Cooperatives Service Reclamation Rural Development Research Report No. 19 in the West Kenneth L. Leathers COSTS OF STRIP MINE RECLAMATION IN THE WEST. By Kenneth L. Leathers. Natural Resource Economics Division; Economics, Statistics, and Cooperatives Service; U.S. Department of Agriculture. Rural Development Research Report No. 19. ABSTRACT Estimated costs of mined land reclamation averaged $3,500 per acre in 1976 for western coal regions, an average of 5 cents per ton of coal produced and less than 1 percent of mine-mouth coal prices. Improvements in reclamation practices as a result of 1977 Federal legislation, as well as inflation, will boost these costs. Earthmoving and reshaping account for about 70 to 80 percent of total reclamation costs at a mine. Key words; Reclamation, cost of reclamation, strip mining, coal, western mining ACKNOWLEDGMENTS The author is grateful to Linley Juers for assistance during this investigation. John Green and Mel Skold deserve a special note of appreciation for asking important questions and providing useful criticism along the way. The contribution of Joseph R. Barse, who wrote the summary and the section on the new Federal surface mine reclamation law, is gratefully acknowledged. The author also wishes to acknowledge the generous assistance extended by many people in the various State and Federal agencies involved with mined land reclamation. A special note of thanks goes to Cheryl Tyler, Linda Stallard, and Linda Turner for their excellent work in typing the manuscript. This study is part of a continuing research program of the Economics, Statistics, and Cooperatives Service. It is being conducted in cooperation with the Office of Energy, Minerals and Industry, Office of Research and Development, U. S. Environmental Protection Agency (EPA), under Agreement lAG—D6—E766. Paul Schwengels is the EPA project officer. Washington, D.C. 20250 February 1980 CONTENTS Page SUMMARY. iii WESTERN REGION COAL PRODUCTION ÁREAS: STATES AND COUNTIES Iv INTRODUCTION. 1 Public Issues • » • 2 Policy Options. 2 Study Objectives • • • 3 Approach. « • 3 RECLAMATION AND THE INSTITUTIONAL ENVIRONtlENT 4 State Laws and Programs. •• ••.••..... • • 4 The Federal Surface Mine Reclamation Act of 1977. 7 Other Regulatory Agencies and Provisions. 9 Implications. •. • • • •••..•••... • 9 ENGINEERING COMPONENT OF SURFACE MINE RECLAMATION. 10 The Sensitivity of Earthwork Requirements to Mining Method and Technology 10 Estimating the Costs of Materials Handling..... 15 Study Limitations. 18 REVEGETATION COMPONENT OF SURFACE MINE RECLAMATION. 18 The Regional Environments. 18 Estimating Requirements and Costs. 24 Study Limitations. 27 OTHER COMPONENTS AND ESTIMATES OF SURFACE MINE RECLAMATION COSTS 28 Mining Impacts on Surface and Ground Waters 28 Other Reclamation Components •. • • • • • • 32 Cost Estimates. • • 35 IMPLICATIONS FOR PUBLIC POLICY AND FUTURE STUDY. 36 REFERENCES. 37 APPENDIX TABLES 43 ii SUMMARY The estimated cost of reclaiming land strip-mined for coal in the West averaged $3,500 per acre in 1976, This was equivalent to 5 cents per ton of coal produced, or less than 1 percent of mine-mouth coal prices that year. The cost of reclamation in Montana and North Dakota averaged $4,700 and $4,200 per acre, respectively. Cost per acre in Wyoming was $3,400, while costs in Arizona, Colo- rado, and New Mexico ranged between $2,900 and $2,600. These costs were based on the reclamation activities actually being carried out through 1976 and do not reflect costs of reclamation to either a uniform or an ideal standard. Prior to the Federal Surface Mine Reclamation Act of 1977, legal standards for reclamation differed somewhat among the Western States. But different standards cannot account for the wide variation among States in estimated average cost of reclamation. Because 70 to 80 percent of total reclamation cost at a mine is typically attributable to earthmoving, differences in the amount of earth to be moved account for most of this per acre variation from mine to mine and from State to State. Strippable coal seams in the Northern Great Plains (NGP) States tend to be more deeply buried than in Arizona, Colorado, and New Mexico. Therefore, earthmoving costs, and hence total reclamation costs, tend to be higher in the northern areas. This is despite the greater difficulties and cost of revegetating land in the arid Southwest than in the NGP. Revegetation has much less influence on total reclamation cost than earthmoving. As a result, total costs average higher per acre in the NGP. Nevertheless, reclamation costs per ton of coal produced are lower in Montana and Wyoming than in the Rocky Mountains/Southwest or North Dakota because Montana/Wyoming coal seams tend to be much thicker, leading to greater coal output per acre. Estimated 1976 reclamation cost per ton in the West ranged between 3 cents for Wyoming and 25 cents for North Dakota. An estimated $15.6 million was spent on mined land reclamation in the West in 1976. By 1980, that amount is projected to rise to at least $54.9 million, based on announced increases in production schedules and an 8-percent rate of inflation. That projection, however, does not allow for any cost increases attributable to improved and more costly reclamation practices required by the 1977 Federal Surface Mine Reclamation Act. Ill WESTERN REGION COAL PRODUCTION AREAS: STATES AND COUNTIES Northern Great Plains region: Montana: South Dakota: North Dakota, continued: MTl Sheridan SDl Carson ND3 Adams Dewey Bowman MT2 Dawson Harding Grant Fallón Perkins Hettinger Richland Slope Roosevelt North Dakota: Stark Wibaux NDl Burke Wyoming: MT3 McCone Divide Prairie McHenry WYl Sheridan McKenzie MT4 Bighorn McLean WY2 Campbell Garfield Mountrail Johnson Musselshell Ward Rosebud Williams WY3 Carbon Treasure Converse ND2 Billings MT5 Custer Burleigh WY4 Lincoln Powder River Dunn Sweetwater Golden Valley Mercer Morton Oliver Rocky Mountain region; Colorado: New Mexico: Utah: COI Moffat NMl San Juan UTl Emery Routt Sevier NM2 McKinley C02 Jackson UT2 Wayne Arizona: G03 Montrose UT3 Garfield ARl Apache Kane Coconino Navajo Pacific region: Washington: Alaska: Lewis (near Healy) Source: (91) iv Costs of Strip Mine Reclamation in the West Kenneth L. Leathers' INTRODUCTION Surface-mined coal accounts for about 60 percent of the Nation's annual coal sup- ply. At current levels of coal production, at least 55,000 acres of land are disturbed annually by such mining. Increasing demand for energy resources, coupled with significant technological innovations in recovery and processing of coal, provide an incentive to stepped-up surface mining, especially in the coal-rich Western United States. Approximately 1.3 million acres, nearly 2,000 square miles of land located pri- marily in the East, have been disturbed to date by surface mining (59). Ij The level of development necessary to achieve 1985 projections of coal production from the western region would disturb as much as 90,000 acres (140 square miles) (61). Orphaned land (previously mined, unreclaimed lands not covered under any pre-1977 Federal or State reclamation law) is estimated at 40 percent of the national total of land previously mined by surface methods. That is, only 60 percent of mined land has been reclaimed. This study makes a comprehensive economic analysis of surface-mined land reclamation in the West. The western region referred to by this study includes Montana, North and South Dakota, and Wyoming (the Northern Great Plains subregion); Colorado, Utah, New Mexico, and Arizona (the Rocky Mountain subregion); and Washington and Alaska (the Pacific subregion). The investigation focuses on land actually mined. Land suffers significant disturbance from operations associated with mining (explora- tion, hauling, coal storage, equipment maintenance), but careful examination of these operations would have exceeded the scope of this study. Reclamation efforts in the West are affected by: (1) Chemical, hydrologie, and physical characteristics of spoils materials as they affect fertility and erodability, (2) the amounts and seasonal distribution of precipitation, length of the growing sea- son, and évapotranspiration, (3) availability of plant species suitable to the area and post-mining land uses, and (4) form of technology and mining techniques employed in extracting and reclaiming the site. Successful revegetation is a slow process in certain areas of the West and could involve centuries (59). ^Assistant professor. Department of Economics, Colorado State University. 1/ Underscored numbers in parentheses refer to literature listed in the references section at the end of this report. Accurate estimates of monetary losses to the Nation stemming from unreclaimed lands do not exist. If it is assumed, for example, that annual Income foregone and/or off-site pollution abatement costs (assumed reclamation benefits) amount to $25 per acre of unreclaimed land, an estimate of present total direct damages would be about $13 million annually« Public cost of a comprehensive, national reclamation program for orphaned lands has been estimated at $385 million in 1976 dollars (28). In annual terms (discounted at 8 percent for 100 years), the direct costs amount to approximately $60 per acre, or more than double the assumed benefits of $25 per acre. Although the accuracy of these assumed program benefits is not known, it can be inferred from the

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