I. Introduction 1

II. Overview of the Kentucky Coal Mining Industry 2

III. Overview of the Public Participation Opportunities in the Oversight Process and the State Program
5

IV. Major Accomplishments/Issues/Innovations in the Kentucky Program 5

A. Regulatory 5

B. Abandoned Mine Land Reclamation (AMLR) 11

V. Success in Achieving the Purposes of SMCRA as Measured by the Number of Observed Off-Site Impacts and the Number of Acres Meeting the Performance Standards at the Time of Bond Release 12

A. Off-Site Impacts 12

B. Bond Release 14

VI. OSM Assistance 14

VII. General Oversight Topic Reviews 15

A. Phase I Bond Release Inspections 17

B. Phase III Bond Release Inspections 17

C. Post-Bond Release 17

D. Inspection Frequency 17

E. Random Sample 18

F. Surface and Groundwater Monitoring 19

G. AML Change Orders 20

H. AML Post-Construction 20

I. Preparation Plant Study Follow-Up 21

J. Notices of Non-Compliance Citing the Use of Explosives
(Citizens Complaint Team) 21

K. Phase II - AMD Task Force 22

L. SOAP 23

Appendix A: Tabular Summary of Core Data to Characterize the Program

Table 1 Coal Production (Non-Federal Lands) T-1

Table 1A Coal Production (Federal Lands) T-1A

Table 2 Inspectable Units T-2

Table 3 State Permitting Actions T-3

Table 4 Off-Site Impacts T-4

Table 5 Annual State Mining and Reclamation Results T-5

Table 6 State and OSM Enforcement Activity T-6

Table 6A Citizen Complaints T-6A

Table 6B State Inspection Activity T-6B

Table 7 State Bond Forfeiture Activity T-7

Table 8 State Staffing T-8

Table 9 Funds Granted to Kentucky by OSM T-9

Appendix B: State Comments on the Report

Appendix C: Permittees Issued Non-Compliances by DSMRE (Listed by Descending Number of Non-Compliances)

Appendix D: Permittees Issued Non-Compliances by DSMRE (Listed Alphabetically)

I. Introduction

The Surface Mining Control and Reclamation Act of 1977 (SMCRA) created the Office of Surface Mining (OSM) to oversee the implementation of and provide Federal funding for State regulatory programs that have been approved by OSM as meeting the minimum standards specified by SMCRA. This report contains summary information regarding the Kentucky program and the effectiveness of the Kentucky program in meeting the applicable purposes of SMCRA as specified in Section 102. This report covers the period of October 1, 1997 to September 30, 1998. Detailed background information and comprehensive reports for the program elements evaluated during the period are available for review and copying at the OSM Lexington Field Office (LFO).

This report follows the same format as in the previous two years. The reporting format is a result of changes to OSM oversight policies implemented during 1996. Previously, OSM oversight procedures were very specific. The revised OSM Directive REG-8 oversight process enables OSM and States to take innovative, results-oriented evaluation approaches tailored to individual State programs and stakeholder interests and needs. During this 1998 Evaluation Year (EY), OSM and the States developed State-specific oversight plans or performance agreements to identify specific program areas and evaluation methodologies directed toward end-results measurement.

The oversight process provides two National measurements of end results--the number and degree of off-site impacts resulting from mining and the number of acres meeting all reclamation requirements as documented by different phases of bond release. The revised process allows OSM to focus oversight on those aspects of the State program that both OSM and the State determine to be most important. This oversight report, in response to the Government Performance and Results Act, corresponds to the Federal Fiscal Year (FY).

The following list of acronyms is used in this report:

ACSI Appalachian Clean Streams Initiative

AMD Acid Mine Drainage

A&E Administration and Enforcement

AML Abandoned Mine Land

AMLIS Abandoned Mine Land Inventory System

AMLR Abandoned Mine Land Reclamation

CO Cessation Order

DAML Division of Abandoned Mine Lands

DSMRE Department for Surface Mining Reclamation and Enforcement

EY Evaluation Year

FY Fiscal Year

GIS Geographic Information System

KAR Kentucky Administrative Regulation

LFO Lexington Field Office

NC Non-Compliance

OSM Office of Surface Mining

SOAP Small Operator Assistance Program

SMCRA Surface Mining Control and Reclamation Act of 1977

SMIS Surface Mining Information System

TDN Ten-Day Notice

II. Overview of the Kentucky Coal Mining Industry

The Regulatory Authority responsible for the regulation of coal mining on non-Federal lands in Kentucky is the Department for Surface Mining Reclamation and Enforcement (DSMRE) headed by Commissioner Carl Campbell. Allen Luttrell is DSMRE's Deputy Commissioner. The three divisions and chiefs in DSMRE are as follows: the Division of Field Services, Mark Thompson, Director; the Division of Permits, James Milam, Director; and the Division of Abandoned Mine Lands (DAML), Steve Hohmann, Director. DSMRE has five regional offices located in Madisonville, Middlesboro, Prestonsburg, Pikeville, and London.

The Administration and Enforcement (A&E) Grant for 1998 is $13,249,061 (Federal funds) and supports 416 positions. OSM funds 88 positions in DAML and has a budget of approximately $15,195,743 for 1998. The Small Operator Assistance Program (SOAP) estimates that 60 projects will be done in 1998.

There are four major coal associations in Kentucky. They are the Kentucky Coal Association, the Western Kentucky Coal Association, the Coal Operators and Associates, Inc., and the Small Coal Operators Advisory Council.

Kentucky has two citizen organizations that are very active in coal mining issues. They are Kentuckians for the Commonwealth, Jane Harrod, Chairperson, and the Kentucky Resources Council, Inc., Thomas FitzGerald, Director.

Kentucky is the third largest coal-producing State in the nation, with an annual production averaging over 160 million short tons during the 1990's. Kentucky was the nation's leading coal producer until 1988, holding that position for over a decade until the production from Wyoming and West Virginia exceeded that in Kentucky.

Nearly every type of coal mining and reclamation practice is found due to the differing coal bearing regions within the State and the availability of coal. Kentucky's coal reserve base, the fifth largest in the nation, consists entirely of bituminous coal. Two major coal provinces in Kentucky are separated by a large geologic uplift called the "Cincinnati Arch." The Eastern Kentucky Coal Field is part of the Appalachian Coal Province where underground, contour, and mountaintop removal mining occurs. The Western Kentucky Coal Field is part of the Interior Coal Province (Illinois Coal Basin) where area and underground mining occurs. The eight most western counties in Kentucky are underlain by the Jackson Purchase Lignite Coal Fields. This potential resource has not been assessed, and no current lignite mining is occurring.

The coal tonnage derived from surface and underground mines has varied considerably over the past 40 years. During the 1950's, underground coal tonnage far exceeded coal produced from surface mines in Kentucky. Although coal production from underground mines remained prominent, surface coal mining production increased steadily throughout the 1960's. Early in the 1970's, surface coal production slightly exceeded that of underground sources for about nine years. Since 1979, coal produced from underground mines has steadily increased over coal produced from surface mines.

Since primacy, underground mines have accounted for approximately one-half the acreage permitted in the State. The high percentage of acreage is due to the State requirement that the shadow area overlying the underground work must be permitted. However, most underground mines actually disturbed very little surface acreage. A review of underground mines in Kentucky indicates there was an overall increase in size during the last four EYs as follows:

Surface mines and associated facilities (haul roads and preparation plants, etc.) account for the other half of acreage permitted in the State. A review of the permitted acreage for surface mines and associated facilities indicates there was an overall increase in size during the last four EYs as follows:

III. Overview of the Public Participation Opportunities in the Oversight Process and the State Program

A team of LFO and DSMRE personnel was formed to develop oversight procedures and special studies for EY 1998. A draft "Oversight Performance Agreement" was developed. The draft was discussed via meetings and/or telephone conversations with members of the Kentuckians for the Commonwealth, Tom FitzGerald (who represents the Kentucky Resources Council), and the major coal associations in Kentucky. The Oversight Performance Agreement was finalized and signed by DSMRE and OSM on November 17, 1997.

LFO maintains a mailing list of concerned citizens, industry groups, environmental groups, and State agencies. The signed Oversight Performance Agreement was mailed to all parties on December 11, 1997. No comments were received that required modification of the final document.

LFO conducted meetings in Hazard (March 16, 1998) and Madisonville (March 23, 1998) to obtain input from concerned stakeholders on the FY 2000 budget. A town meeting with OSM's Director was also conducted in Hazard (June 10, 1998).

When SMCRA was enacted, it created many avenues for citizens' involvement. Thus, individual citizens have a statutory role in practically every phase of the surface mining program from permit issuance to bond release and everything in between. Since SMCRA has been on the books, coal field citizens have used those rights to help shape virtually all of the policies and programs that govern surface coal mining and reclamation in America.

IV. Major Accomplishments/Issues/Innovations in the Kentucky Program

A. Regulatory

DSMRE is maintaining an effective regulatory program for permitting, inspection, and enforcement of surface coal mining and reclamation operations. One of the major emphases of the present Kentucky administration has been the reduction of interim and two-acre permits. As of September 30, 1998, seven interim permits remain. All two-acre permits have now either been released or forfeited. The State is working with the Office of Legal Services and DSMRE field staff to either release the bonds where appropriate or forfeit those bonds that do not meet performance standards.

The major accomplishments\innovations for the EY are as follows:

On April 1, 1998, Governor Paul Patton signed into law legislation creating a supplemental bond forfeiture fund. The purpose of this fund is to supplement forfeited bonds on minesites needing additional monies to complete the approved reclamation plan. The legislation passed overwhelmingly by the House and Senate of the 1998 Kentucky General Assembly. This was the last remaining recommendation to be implemented from a study completed in July 1993 by a multi-interest group studying ways to improve the Kentucky bonding program. This same legislation had been previously introduced in the Kentucky General Assembly in 1994 and 1996. Each time, the legislation failed to get approved. Funds generated from interest accrued on forfeited reclamation bonds and a percentage of monies collected from penalties will be the two sources of income for this program.

Another recommendation from this multi-interest group implemented by DSMRE in 1994 was to create a supplemental assurance fund. The sole purpose of the supplemental assurance fund is to address permits that have been approved with an alternative backfilling and grading plan. Monies posted by the permittee are in addition to and distinct from the normal reclamation bond required under Section 509(a) of SMCRA and 405 Kentucky Administrative Regulation (KAR) Chapter 10. These monies would provide additional resources to assure that the extra exposure associated with an alternative backfilling and grading plan does not compromise the ability of the State to affect reclamation in the case of operator default. Monies posted by the permittee are returned once rough backfilling and grading have been completed for the area added under the alternative backfilling and grading plan. At the end of the EY, DSMRE held a total of $37.95 million in the supplemental assurance fund.

The Appalachian Clean Streams Initiative (ACSI) was developed to encourage the clean-up of streams in Appalachia polluted by acid mine drainage (AMD). Kentucky continues to support this initiative. DSMRE signed a partnership agreement with OSM, the Daniel Boone National Forest, and the Kentucky Council of Trout Unlimited. The partnership agreement expresses the intention of these parties to mitigate AMD problems and restore the fishery potential in the lower four miles of Rock Creek, a tributary to the Big South Fork of the Cumberland River in McCreary County, Kentucky.

DSMRE maintains an inventory of known AMD permits with related coal bed and watershed information. The inventory is updated as new information becomes available. The inventory is made available to both the Division of Permits' review staff, as well as the Division of Field Services' inspection staff. LFO, working jointly with DSMRE, has developed a basic Geographic Information System (GIS) map of the inventoried sites.

The Kentucky Remining Team is continuing their efforts of promoting remining, evaluating potential remining sites, reducing or eliminating impediments to remining, and creating new incentives. The team members represent two Kentucky agencies, two Federal agencies, and the environmental community. The team has been working with several coal companies in both the Eastern and Western coal fields to encourage site-specific remining projects. The team is also continuing to work on remining options and incentives that might be used to encourage more participation. They include:

• •Develop reclamation contracts with DAML around the principle that sites being addressed are abandoned mine land (AML)-eligible. However, the priority is such that the AML program will not be able to fund the sites.

• •Define and provide guidance on the remining incentives approved as the result of the 1992 Energy Policy Act.

• •Encourage water quality permitting using the Rahall Amendment to the Clean Water Act.

DSMRE continues to take an active role in two additional National OSM initiatives. DSMRE has members on the National Blasting Work Group and the Underground Mine Outcrop Barrier Work Group. DSMRE's participation in both initiatives provides important technical information on the mining practices and conditions in Kentucky. DSMRE and LFO have also been active participants with the Interstate Mining Compact Commission in National remining and AMD initiatives.

DSMRE continues its efforts on the Electronic Permitting Initiative. The plan requires intensive work by employees within DSMRE, as well as contributions from representatives of the regulated and environmental communities. DSMRE received $2,700,000 of Empower Kentucky funds to continue its effort.

DSMRE is actively promoting reforestation as a post-mining land use. DSMRE, in conjunction with the University of Kentucky, has developed approximately 70 acres of test plots at the Star Fire Mine near Hazard, Kentucky. Neighboring States have requested assistance from DSMRE in developing their reforestation initiatives. DSMRE has also been asked to help develop and be a partner in the recently created National Reforestation Initiative.

On May 2, 1997, the Commonwealth of Kentucky submitted a proposed Federal Lands Cooperative Agreement. The proposal was published in the Federal Register on June 4, 1997. OSM and the Department of Interior have completed the review of the proposal and comments received on the proposal. The Secretary of the Interior has agreed to the proposal. DSMRE will become the Regulatory Authority for coal mines located on Federal lands in Kentucky on November 2, 1998.

OSM initiated the annual Excellence in Surface Coal Mining and Reclamation Awards in 1986 to give National recognition to the people and companies responsible for outstanding achievements in environmentally sound surface mining and land reclamation. Since that time, numerous Kentucky surface coal mining operations have been recognized for their exemplary manner in implementing SMCRA requirements. During this EY, Jamieson Construction Company, Miller Branch Mine, near Bimble, Kentucky, won the OSM Director's Award for 1998. The focus of the award changes each year. For 1998, it was for exemplary reclamation resulting in higher or better post-mining land use.

Issues outstanding at the end of the EY are as follows:

Written Findings

There is no official written findings document for major or minor revisions, transfers, sales, or assignments. The revision file in the Division of Permits has sufficient documentation supporting their decisions. However, these documents are scattered throughout the revision file. The Division of Permits is inconsistent with the written findings regulations in that the original permits require an official findings document. However, those same regulations require informal written findings for revision and successor permits.

Disposal of Underground Development Waste

It was discovered during a random oversight inspection that specific design requirements were not being required for permits involving disposal of underground development waste. The issue was programmatic. In a letter dated December 16, 1993, DSMRE advised OSM that they were going to make changes to the regulation. The planned changes would be similar to those being proposed by Virginia. DSMRE further advised they intended to submit draft changes to LFO for informal review. The changes would include backfilling and grading, hollowfills, and disposing of refuse in both the surface and underground chapters of 405 KAR. Kentucky projected that a draft would be available around April 1, 1994. No further correspondence has been received.

Probable Hydrologic Consequences

LFO and DSMRE have been discussing outstanding hydrology issues concerning the prediction of AMD for surface and underground mines, the width of outcrop barriers for underground mines, and ground and surface water monitoring. Joint special studies continued on these issues during EY 1997. The studies were completed in EY 1998 and comments from DSMRE are pending. Additional special studies are planned in EY 1999. DSMRE is making progress in identifying and solving the hydrology issues.

Roads

The permitting of public roads has always been a difficult issue in Kentucky. The Federal requirements for permitting are set forth in the definition of "affected area" insofar as it excludes roads, which are included within the definition of "surface coal mining operations." To apply these definitions, judgments must be made with regard to whether roads are maintained with public funds and whether there is substantial public use. LFO and DSMRE continue to discuss the issues related to permitting of public roads.

Mountaintop Mining

Because of recent public interest in mountaintop mining in Appalachia and the resulting fills, LFO will evaluate this issue in Kentucky in EY 1999.

Overall, the Kentucky program is effectively administered. DSMRE maintains a strong commitment to protect the environment and citizens of the coal fields while regulating and encouraging a viable coal industry. DSMRE has supported OSM's National initiatives, developed a reforestation Reclamation Advisory Memorandum, and is committed to identifying and preventing AMD problems. OSM expects to maintain an excellent working relationship with DSMRE and looks forward to a continued commitment to improve the Kentucky program.

B. Abandoned Mine Land Reclamation (AMLR)

The Kentucky AMLR program is successful in achieving lasting and effective reclamation of mined lands. Construction grants continue to include high priority projects. Kentucky continues to consider high priority project selection criteria for AML emergency complaints referred to them by OSM. During the evaluation year, Kentucky completed 36 priorities one and two AML projects. One of the projects extended and improved community water supply facilities affecting six residences, at a cost of just over $155,000. During the period, Kentucky submitted 29 new projects for authorization to proceed. Two of the projects will provide a safe domestic water supply for 37 residences, at an estimated cost of $467,785.

The current management of DAML continues to implement significant improvements in their program. Their continued support of the procedures implemented in EY 1996 and EY 1997 improved the internal control and support for change orders as recommended in the previous audit of the State AMLR program. Kentucky fully supports the direct access to the AML Inventory System (AMLIS) that allows them to electronically input AML problem data. The State has been directly updating the AMLIS since the fall of 1995. The State sent three employees to OSM-sponsored training on improvements to the AMLIS.

DAML also administers the reclamation of forfeited coal mining permits using forfeited reclamation bonds. DAML continues to improve its efforts in reclaiming forfeited permits. During the EY, DAML issued six new group contracts containing 25 forfeited permits with 531.74 acres. In addition, DAML continued reclamation activities on 12 group contracts containing 116 forfeited permits with 1,623.1 acres from the previous EY. DAML completed reclamation on 13 group contracts containing 92 permits with 1,158.11 acres. At the end of the EY, five group contracts containing 49 permits with 996.73 acres were still ongoing.

During this EY, OSM investigated 227 AML emergency complaints. OSM referred 108 of the complaints to the State when the site conditions did not meet Federal emergency criteria. OSM evaluated 119 of the complaints for their declaration as Federal emergency projects. OSM declared 63 of these complaints as Federal emergency projects. OSM referred 19 to the State as serious, high priority AML problems that did not meet emergency criteria. These complaints are either being monitored or are currently under evaluation by the State. Out of the remaining complaints, 14 are still under OSM review; 11 were determined not to be related to coal mining; and 12 were declared not to be eligible lands or waters.

V. Success in Achieving the Purposes of SMCRA as Measured by the Number of Observed Off-Site Impacts and the Number of Acres Meeting the Performance Standards at the Time of Bond Release

A. Off-Site Impacts

During the EY, DSMRE issued 857 Non-Compliances (NC). These NCs cited 1,465 performance standards. The most frequently cited violation was general provisions/other. A breakdown of performance standards cited by percent follows:

A total of 90 Cessation Orders (CO) was issued (75 Failure-to-Abate COs, and 15 imminent harm COs.

For this EY, Kentucky provided 128 NCs and 15 COs that contained off-site impacts. The 142 enforcement actions resulted in 165 performance standard violations. The determination of off-site impacts was based on DSMRE's documentation and the OSM reviewer's interpretation of the enforcement language using any inspection reports associated with the enforcement action. The review of the Inspector's Violation Statement prepared for the penalty assessment was the primary resource document.

The 142 enforcement actions involved 104 minesites with off-site impacts. This is approximately four percent of the minesites in Kentucky. Included within these actions were four occurrences of blasting violations involving flyrock. Three cases involved damage to structures, and one resulted in a mudslide with damage to a vehicle. In each case, DSMRE and LFO jointly reviewed the occurrence and required a new blast design to be approved before mining operations could continue.

Those NCs identified with off-site impacts were analyzed for the following criteria:

• •type of incident



• •resource affected



• •degree of impact

Of the 165 violations with off-site impacts, approximately 52 percent impacted surface water. The next major type of impact was encroachment into prohibited areas (24 percent). The third type of off-site impact was land instability (17 percent).

From the data collected, the total impacts assessed from coal mining operations within the EY included 56.4 miles of streams, 82.9 acres of land, and four wells. As shown in the attached tables, the majority of impacts were minor to moderate. However, as indicated, the largest impacts occurred within a few permits.

The preliminary findings indicate that approximately 54 percent of the off-site impacts in Kentucky involve land disturbance with a minor to moderate impact. Also, the findings indicate that approximately 49 percent of the off-site impacts in Kentucky involve streams with a few major incidents accounting for approximately 70 percent of the impact. Approximately 20 percent of the off-site impacts involved disturbance to both land and streams.

Listed in Appendices C and D are those permittees that received NCs during the period January 1, 1998 through June 30, 1998. The lists were compiled from violation information contained in the Surface Mining Information System (SMIS). Appendix C is listed in descending number of NCs, and Appendix D is listed alphabetically.

B. Bond Release

The goal of reclamation is to reclaim land mined by a surface coal mining operation to a stable condition, vegetated, non-polluting, and of equal or greater value than the pre-mining condition. To achieve the goals of reclamation, a system of phased bond releases has been implemented in Kentucky. To satisfy Phase I requirements in Kentucky, the reclaimed area must be backfilled, regraded, top-soiled, seeded, mulched, drainage-controlled, and a planting report submitted. Phase II requires the reclaimed area have established revegetation in accordance with the approved reclamation plan and meet the standards for revegetation success, except for productivity standards. Also, the reclaimed area must not be contributing suspended solids to stream flow or runoff outside the permit area. Phase III requires that the reclaimed area must have successfully met all surface coal mining and reclamation standards in accordance with the approved reclamation plan, that the reclaimed land is capable of supporting the approved post-mining land use requirements, and that the applicable liability period has expired.

In Table 5, Annual State Mining and Reclamation Results, Kentucky reported that they granted bond release on 13,898 acres for Phase I reclamation, 9,104 acres for Phase II reclamation, and 20,638 acres for Phase III reclamation. OSM's review of these minesites, through 245 joint inspections on Phase I and Phase III bond releases, found that the State is meeting the requirements of their bond release program on permanent program permits.

VI. OSM Assistance

During the EY, OSM offered two technical training opportunities for DSMRE staff. The underground mining training was offered in Pikeville and Barbourville in June and July 1998. Also during the EY, DAML staff attended a training/instruction session on AMLIS held in Pittsburgh.

Table 9, Funds Granted to Kentucky by OSM, identifies Federal funds awarded during FY 1998. The AML program received $15,195,743, which is 100 percent of the total program cost. SOAP, which is also 100 percent Federally funded, received $1,000,000. The A&E grant, which funds the regulatory program, received $13,249,061. The Regulatory program is 50 percent Federally funded.

OSM provided additional funding to DSMRE through two Cooperative Agreements. The first action was an Amendment to the Applicant Violator System Cooperative Agreement for $30,000. The scope of activity was expanded to include the establishment of an electronic flow of ownership and control information. The second action was to award $57,000 for the GIS-Based Hollowfill Inventory Cooperative Agreement through the original agreement and an Amendment. Of this $57,000, $17,000 came from the U.S. Environmental Protection Agency, Region IV.

OSM is committed to provide adequate funding and technical assistance to the Kentucky program. Technical training courses are available to DSMRE upon request. Regional and LFO technical staff are also available to provide support to the Kentucky program.

VII. General Oversight Topic Reviews

During the EY, LFO conducted 748 oversight-related inspections.

LFO issued 53 Ten-Day Notices (TDN) during the EY. These 53 TDNs contained 79 potential performance standard violations. Forty-seven TDNs were a result of citizen complaints, four from complete random oversight inspections, one from a bond release inspection, and one a result of a joint Federal and State inspection of a former Federal land area. DSMRE responded appropriately on 33 of the TDNs. As of the close of the EY, 23 TDNs were pending a decision on appropriateness. Three of these pending TDNs are from previous EYs.

No Federal enforcement action was taken. On one occasion, DSMRE was notified that their response was considered inappropriate. The case concerned the permitting of a public road. DSMRE provided a follow-up response to the TDN. This response is under review as of the end of the EY.

LFO conducted 126 oversight inspections on State AMLR projects in accordance with the EY 1998 Oversight Performance Agreement as follows:

22 pre-authorization inspections

56 active construction inspections

22 final construction inspections

26 post-construction inspections

OSM identified a concern on six of the AML construction inspections. All six of the concerns were satisfactorily resolved with the State. All were primarily site-specific in nature, with no programmatic concerns identified.

Several special oversight studies were initiated, but were not completed due to the complex nature of the studies and/or the workload of the staff involved. The studies include Prime Farmland, Sediment Pond Design Standards, Durable Rock Fills, Blasting Oversight, Underground Mining-Authorized Punchouts, and implementation of the Energy Policy Act. These studies are ongoing and will be discussed in next year's annual report.

Draft reports are in the process of being prepared for the following studies: Sediment Pond Drainage Control, grant-related review of DSMRE's current Memoranda of Agreement, Baseline Water Monitoring, and Outcrop Barrier Study. These reports will be finalized and discussed in next year's annual report.

The following oversight studies were completed during the EY.

A. Phase I Bond Release Inspections

This was a study on 138 Phase I bond-released minesites that were inspected as part of OSM's random oversight inspection program. OSM inspections on these minesites were to determine if all applicable bond release standards were met at the time the Phase I Bond Release was granted by Kentucky. OSM found that Kentucky is meeting their requirements for Phase I Bond Release on permanent program permits.

B. Phase III Bond Release Inspections

This was a study on 116 Phase III Bond Release applications that was reviewed during the EY. OSM inspections on these Phase III Bond Release applications were conducted after the Kentucky inspector and the bond release specialist had made a decision to grant the bond release. OSM found that Kentucky is meeting their requirements for Phase III Bond Release on permanent program permits.

• Post-Bond Release

This was a study that reviewed long-term effectiveness and revegetation success on interim coal refuse and preparation plants following complete bond release. The study specifically evaluated sites to determine the reclamation success where both four feet and less than four feet of soil cover were used. OSM found that the sites visited had adequate vegetation established. In addition, these sites were found to have the beginnings of horizontal soil development from the successive deposition of organic matter throughout the years.

D. Inspection Frequency

For permitted coal minesites, Kentucky's inspection frequency was evaluated during the random sample inspections. This method involved a statistical measurement of inspection frequency using a random sample of inspectable units. The required frequency was based on 405 KAR 12:010, Section 3(5). This provision requires the State to conduct one complete and two partial inspections per quarter for all minesites, except Phase I bond release sites with a determination that the site is revegetated and stable or Phase II bond release sites. Those sites in the bond release process or in temporary cessation require the State to conduct one complete inspection per quarter.

Coal Mines Number of Complete Number of Partial

and Facilities Inspections Inspections

Active 10,422 18,263

Inactive 1,027 722

Abandoned 87 103

TOTAL 11,536 19,088

Inspectable Unit Information

Total Number of Permits Requiring Inspections

During This Period 2,538

Total Number of Permits Meeting Frequency 2,531

Percentage of Permits Meeting Frequency 99.7%

From the information provided, Kentucky's inspectors conducted 30,624 inspections and met inspection frequency on 99.7 percent of the inspectable units.

This evaluation indicates DSMRE's continuing commitment to meet the inspection frequency.

E. Random Sample

OSM historically completed oversight inspections on 430 random sample inspections during the EY. EY 1998 followed last year's format moving from a very structured oversight approach to a more innovative approach, allowing fewer random sample inspections. The EY coincides with the Federal fiscal year. This EY, October 1, 1997 through September 30, 1998, LFO conducted 334 random complete inspections for a general assessment of Kentucky's program. The random sample was selected from the 2,789 surface coal mining and reclamation operations in Kentucky as of September 30, 1997. The purpose of these inspections was to evaluate the degree of industry compliance with the approved State program.

OSM found that 268 of the 334 (80 percent) minesites in Kentucky were in full compliance with all performance standard categories. On the other 67 sites, 130 violations were observed. The performance standards most often in non-compliance were the hydrologic balance, backfilling and grading, and permit administration. OSM inspectors evaluated the seriousness of violations on random complete inspections. The data for the 335 random inspections shows the impact of 50 percent of all the violations remains within the permit area, 46 percent extends outside the permit area, and less than 4 percent are record keeping violations. In addition, 18 percent of the violations are minor, 48 percent have a moderate degree of impact, and 34 percent have a considerable degree of impact. In 94 percent (122 of 130 violations) of violations observed by OSM inspectors, the primary cause of the violations was operator negligence.

F. Surface and Groundwater Monitoring

This was a joint OSM/DSMRE study evaluating the quality of surface and groundwater monitoring data submitted by permittees pursuant to the approved monitoring plans in their permits and the requirements of the Kentucky Pollutant Discharge Elimination System.

OSM Reclamation Specialists, in consultation with staff at LFO and a DSMRE Hydrogeologist, performed field sampling and analysis at a total of 45 permits. The results of the field analysis were compared with split samples collected for the permittee as part of the permittee's monitoring program. Recommendations resulting from this study are as follows:

• •Develop a policy addressing the filing of water monitoring reports for all inspectable units such that they are readily available for review by interested parties.

• •Update water quality data entry forms to accommodate pertinent information for springs and holding times.

• •Continue and increase DSMRE's emphasis on the electronic submittal of water monitoring reports.



• •Develop a handbook for surface and groundwater monitoring. The handbook would identify regulatory requirements and standard methods for water sampling and analysis and would be used by both inspectors and the industry.



• •Require that all laboratory analyses performed for baseline and "during-mining" data collection be accompanied by quality assurance and control information for the reporting laboratory. This will ensure that reporting laboratories regularly check analytical results for accuracy and precision, establish minimum detection limits for results, and instill confidence in the data being collected and reported.



• •Develop procedures and standards for the certification of both the entities collecting the samples and the laboratories conducting the analyses to ensure that the collection and analysis of all technical data submitted in the permit application have been planned by or conducted under the direction of a qualified professional as required by 405 KAR 8:010, Section 5(3).

G. AML Change Orders

The study consisted of a review of change orders that resulted in increased project costs involving contracts on AML projects. The study determined that DAML's procedures are sufficient to satisfy future State AML program audits and provide adequate internal controls.

H. AML Post-Construction

The study consisted of a post-construction review of AML projects. Twenty-five projects that had been completed for at least two growing seasons, but not more than five years, were visited in the field. The study found revegetation efforts successful even with the serious drought conditions that prevailed in Kentucky during the 1998 summer months. Very minor maintenance needs were identified. In general, the State's reclamation of all of the projects is effective and accomplishing long-term success in achieving the goals of the projects and the AML program.

I. Preparation Plant Study Follow-Up

In 1997, a joint OSM-DSMRE study of preparation plant reclamation discovered some significant problems with the reclamation bonding and permitted reclamation plans of preparation plant facilities. The study reviewed sites that have been inactive for several years. DSMRE is making a concerted effort to rectify the problems identified.

With training and consultation from DAML personnel, DSMRE field personnel are recalculating the reclamation cost estimates on preparation plant facilities statewide. The Division of Field Services and the Division of Permits are working together to identify inadequate reclamation plans and are requiring permittees to update the permit.

In addition to the above measures, the Division of Field Services and the Division of Permits are holding discussions for development of new bond calculation methods to ensure bond amounts are adequate to reclaim preparation facilities to their approved post-mining uses.

J. Notices of Non-Compliance Citing the Use of Explosives

(Citizens Complaint Team)

In 1997, OSM and DSMRE developed a joint study of notices of non-compliance issued for violations of the blasting regulations. The objectives of the study were to identify if blasting violations were "complaint-driven" and to identify administrative problems in the enforcement process. For the purposes of this study, NCs were considered "complaint-driven" if violation(s) cited corresponded with the specific nature of the complaint.

The review period for this study was from July 1, 1996 to June 30, 1997. During the period, DSMRE received 256 citizens' requests for inspection concerning the use of explosives and issued 31 notices of non-compliance citing 405 KAR 16:120/18:120, Use of Explosives. All 31 notices of non-compliance issued were reviewed during this study. In addition, citizens' requests for inspections that appeared to initiate investigations that led to the issuance of those violations were also reviewed. This involved the review of 20 citizens' requests for inspections. The final component reviewed was the penalty assessment worksheets for each NC that had been processed through the penalty assessment process. A total of 30 of the 31 notices of non-compliance had gone through the preassessment process.

After reviewing 31 enforcement actions issued during the review period for violations of the use of explosives and associated citizens' requests for inspections, the study found that notices of non-compliance were not "complaint driven." Additionally, a review of the penalty pre-assessments on 30 of those enforcement actions found that all were assessed in accordance with the penalty assessment regulations, and half of the cases resulted in penalties ranging from $400 to $5000. The intent of the blasting laws/regulations is to prevent personal injury or death, property damage, and environmental harm. The study found that DSMRE identified imminent danger circumstances and required blast designs to be revised to prevent future flyrock occurrences before blasting operations could resume.

K. Phase II - AMD Task Force

This special study was initiated as a follow-up to the original joint AMD Inspection Task Force study completed in 1995. The purpose was to review and verify the report's conclusions and field observations. The study confirmed implementation by DSMRE of several significant recommendations included in the original study. These include:

• •Development of an AMD inventory with related coal bed and watershed information. This information is now routinely used by the Division of Permits on permit applications in AMD-prone areas.



• •Availability of the inventory on a GIS.



• •Availability of refresher training on acid-forming materials to permitting and inspection staff.



• •Availability of additional field equipment to inspectors to measure both water quality and overburden.

• •Electronic submittal of water monitoring is encouraged, but remains voluntary on the part of the permittee.

L. SOAP

A SOAP review was conducted at the DSMRE office. OSM interviewed State personnel responsible for the administration of this program to ascertain what policies and procedures Kentucky employs in administering this program. A sample of 15 SOAP applications submitted between October 1, 1995 and September 30, 1997, was reviewed to determine if information in the files supported the information obtained during the interview. The reviewers also tabulated information from the sampled files on the amounts expended by DSMRE in obtaining allowable services and to ascertain whether steps were taken to recover SOAP funds whenever an eligible operator became liable for any monies expended by this program.

DSMRE's implementation of SOAP was found to be in accordance with their approved program. There were no implementation issues found during the review.

Copies of individual topic reviews may be requested in writing to the following address:

Office of Surface Mining

Lexington Field Office

2675 Regency Road

Lexington, Kentucky 40503-2922

These tables present data pertinent to mining operations and State and Federal regulatory activities within Kentucky. They also summarize funding provided by OSM and Kentucky staffing. Unless otherwise specified, the reporting period for the data contained in all tables is October 1, 1997 to September 30, 1998. Additional data used by OSM in its evaluation of Kentucky's performance is available for review in the evaluation files maintained by the Lexington OSM Office.