APPENDIX MONDAY, AUGUST 3, 1987 ADDITIONAL MATERIAL SUBMITTED FOR THE HEARING RECORD STATEMENT OF CONGRESSMAN FRANK MCCLOSKEY I WOULD LIKE TO THANK CHAIRMAN UDALL AND THE MEMBERS OF THE SUBCOMMITTEE FOR SCHEDULING THIS HEARING TO COMMEMORATE THE TENTH ANNIVERSARY OF THE PASSAGE OF THE SURFACE MINING CONTROL AND RECLAMATION ACT. THE EIGHTH DISTRICT OF INDIANA, WHICH I REPRESENT, IS THE SOURCE OF 75% OF THE COAL MINED IN INDIANA. COAL MINING IS VITAL TO THE ECONOMY OF SOUTHERN INDIANA, AND I ESPECIALLY APPRECIATE THE OPPORTUNITY TO PRESENT TESTIMONY TODAY RELATIVE TO THE IMPLEMENTATION OF THE 1977 LEGISLATION AND TO THE CONDITION OF SURFACE MINING RECLAMATION IN INDIANA. LAST MONTH I TESTIFIED BEFORE THE HOUSE INTERIOR SUBCOMMITTEE ON MINING AND NATURAL RESOURCES, CHAIRED BY INSOLVENCIES AND THE RESULTING UNRECLAIMED SURFACE MINES. TODAY I WOULD LIKE TO DETAIL FURTHER THE CONDITION OF SURFACE MINE RECLAMATION IN INDIANA. ALTHOUGH THE SITUATION HAS IMPROVED SINCE THE STATE FIRST ASSUMED PRIMACY IN 1982, LAND IS STILL BEING MINED AND NOT RECLAIMED. A MAJOR CAUSE OF UNRECLAIMED LAND SINCE 1982 HAS BEEN THE BANKRUPTCIES OF BOTH THE MINING COMPANIES AND OF THEIR BONDING COMPANIES. BONDS WERE MEANT TO PROVIDE A SAFETY NET FOR THE LAND OWNER IN THE EVENT THAT THE MINING COMPANY FAILS TO RECLAIM THE SURFACE (93) MINED LAND. HOWEVER THIS SAFETY NET IS FLAWED DUE TO THE BANKRUPTCIES OF BOTH MINING AND BONDING COMPANIES. TEN YEARS AFTER CONGRESS PASSED LEGISLATION TO GUARANTEE THAT SURFACE MINES WOULD BE RECLAIMED, FARMERS ARE STILL HAVING THEIR LAND DESTROYED. FOR EXAMPLE, IN THE EIGHTH DISTRICT OF INDIANA THERE IS AN ELDERLY AMISH WIDOW WHO LIVES IN A SMALL HOUSE ON WHAT WAS ONCE SIX ACRES OF RICH FARMLAND. HER LATE HUSBAND HAD ENTERED INTO A LEASE WITH THE INVESCO MINING COMPANY WHICH MINED ALL OF HER LAND EXCEPT FOR A SMALL AREA AROUND HER HOUSE. INVESCO DECLARED BANKRUPTCY AS DID GUARD CASUALTY AND SURETY COMPANY, WHICH HAD BONDED INVESCO. NOW THIS WOMAN IS ILL AND HER HOUSE IS SITTING ON A POSTAGE-STAMP SIZED PIECE OF LAND SURROUNDED BY SIX ACRES OF UNRECLAIMED STRIP-MINE. WHEN THE BOND SAFETY NET FAILS, THE LANDOWNERS ARE NOT THE ONLY PEOPLE HARMED. RESPONSIBLE COAL MINERS, WHO ARE STILL MINING AND RECLAIMING, HAVE A MAXIMUM OF ONLY NINETY DAYS TO FIND A NEW BONDING COMPANY TO REPLACE THE BOND ISSUED BY THE INSOLVENT COMPANY. IN THE SURFACE MINING INDUSTRY, BONDING COMPANIES OFTEN REQUIRE COLLATERAL EQUAL TO 80% TO 100% OF THE VALUE OF THE BOND. IN THE CASE OF BONDING COMPANY BANKRUPTCIES, THE BOND COLLATERAL IS STILL HELD BY THE BANKRUPT COMPANY AND IS NOT AVAILABLE FOR THE NEW BOND. WHEN A MINING COMPANY HAS POSTED 100% COLLATERAL FOR A BOND AND THEN, THE INSURER DECLARES BANKRUPTCY, THE COMPANY MAY BE REQUIRED TO AGAIN RAISE 100% COLLATERAL FOR A NEW BOND WITH A DIFFERENT INSURER. THIS CAN RESULT IN THE COMPANY ACTUALLY POSTING COLLATERAL EQUAL TO TWICE THE VALUE OF THE BOND. THE COLLATERAL FROM THE BANKRUPT COMPANY CAN OCCASIONALLY BE TRANSFERRED TO A DIFFERENT INSURER, BUT THIS CAN BE A LONG AND COMPLICATED LEGAL PROCEDURE. THE MINING COMPANIES ARE ALSO FINDING THAT THEY ARE OCCASIONALLY UNABLE TO SECURE A REPLACEMENT BOND. THEIR ONLY CHOICES ARE TO STOP MINING OR SECURE ALTERNATIVE BONDING. ALTERNATIVE BONDING, SUCH AS LINES OF CREDIT OR CERTIFICATES OF DEPOSIT, ALSO REQUIRE 100% COLLATERAL. FARMERS AND COAL MINERS ARE THE FOUNDATION OF SOUTHWESTERN INDIANA'S ECONOMY. WITH PROPER REGULATION, AGRICULTURE AND SURFACE MINING CAN COEXIST. BANKRUPTCIES THREATEN BOTH OF THESE GROUPS BY LEAVING PRIME UNINSURED. THIS IS A SERIOUS PROBLEM IN SOUTHERN INDIANA. IN MY DISTRICT ALONE, ALMOST 3,700 ACRES OF LAND ARE UNRECLAIMED AS ́A RESULT OF BONDING AND SURETY COMPANIES DECLARING BANKRUPTCY. THE STATE OF INDIANA REQUIRES THAT BONDING AND SURETY COMPANIES SUBMIT TO AN AUDIT ONCE EVERY THREE YEARS. THE LARGEST INSOLVENT SURETY IN INDIANA, GUARD CASUALTY AND BONDING, BEGAN ISSUING BONDS IN 1981 AND WAS NOT AUDITED UNTIL 1984. DURING THOSE THREE YEARS, GUARD ACCUMULATED $17 MILLION IN LIABILITIES AGAINST $900,000 IN ASSETS. IT IS MY UNDERSTANDING THAT THE STATE IS INVESTIGATING TO DETERMINE WHETHER INTENTIONAL MISMANAGEMENT WAS INVOLVED. AT THIS TIME, THERE APPEARS TO BE NOTHING TO PREVENT FUTURE BONDING COMPANY BANKRUPTCIES. THE STATES MUST REGULATE INSURANCE COMPANIES TO GUARANTEE THAT THE PUBLIC WILL BE PROTECTED. IS NOT SUFFICIENT SUPERVISION FOR A RECENTLY FORMED BONDING COMPANY. WE MUST HAVE ADEQUATE SUPERVISION BY STATE AUTHORITIES TO ENSURE THAT ANOTHER BONDING COMPANY BANKRUPTCY DOES NOT HAPPEN. THE INDIANA DEPARTMENT OF NATURAL RESOURCES AND THE OFFICE OF SURFACE MINING IN INDIANAPOLIS ARE AWARE OF THE EFFECT OF BONDING COMPANY BANKRUPTCIES ON LAND OWNERS AND ON SMALL INDEPENDENT COAL MINERS. THESE TWO AGENCIES HAVE WORKED TOGETHER TO SUCCESSFULLY ADDRESS OTHER SURFACE MINING ISSUES, SUCH AS PROBABLE HYDROLOGICAL CONSEQUENCES OF SURFACE MINING AND A REEVALUATION OF INDIANA'S PERMITTING PROCEDURES. I AM HOPEFUL THAT THROUGH CO-OPERATION AT THE STATE AND FEDERAL LEVEL A SYSTEM WILL BE DEVISED THAT PROVIDES ADEQUATE PROTECTION IN THE EVENT OF FUTURE BONDING COMPANY BANKRUPTCIES. IN ADDITION TO INVESTIGATING OPTIONS TO PREVENT FUTURE BONDING COMPANY FAILURES, THE ALMOST 4,000 ACRES OF UNRECLAIMED MINES IN INDIANA AND OVER 31,000 ACRES NATIONWIDE RESULTING FROM BONDING COMPANY BANKRUPTCIES MUST BE RETURNED TO USABLE LAND. AT THIS TIME, THERE APPEARS TO BE NO AGENCY OR DOLLARS AVAILABLE FOR THIS PURPOSE. THE LEGISLATURE OF THE STATE OF INDIANA TOOK ACTION THIS YEAR TO TRY TO RECTIFY THIS SITUATION BY ESTABLISHING A FUND INTO WHICH ALL COLLECTED MINING INFRACTION FINES ARE TO BE DEPOSITED. IT APPEARS HOWEVER THAT THIS FUND IS ACCUMULATING VERY SLOWLY SINCE THE STATE OF INDIANA HAS COLLECTED ONLY A SMALL PERCENTAGE OF THESE FINES. THE VAST MAJORITY OF UNCOLLECTED FINES WERE LEVIED AGAINST A DOZEN IRRESPONSIBLE MINING COMPANIES WHICH HAVE SINCE FILED FOR BANKRUPTCY. THE AMOUNT COLLECTED IN THIS FUND IS ONLY $525,000 VERSUS A STATEWIDE ESTIMATED RECLAMATION COST OF $12 MILLION. THIS FUND IS TO BE USED FOR THE RECLAMATION OF LAND IN ORDER OF PRIORITY, WITH ENVIRONMENTALLY HAZARDOUS SITES HAVING TOP I LAUD THIS EMPHASIS ON ENVIRONMENTAL AND HEALTH HAZARDS, BUT I ALSO FEAR THAT MANY OF THESE FARM SITES IN THE EIGHTH DISTRICT, INDEED THROUGHOUT SOUTHWESTERN INDIANA, WILL NEVER BE RECLAIMED THROUGH THIS FUND. THERE IS SIMPLY TOO LITTLE MONEY AND THERE ARE TOO MANY SITES OF HIGHER PRIORITY, SO THAT SMALL FARM SITES, SUCH AS THE AMISH WOMAN'S SIX ACRE FARM WHICH I MENTIONED EARLIER, WILL HAVE TO WAIT SEVERAL YEARS BEFORE THE LAND IS RECLAIMED, IF EVER. THE GOVERNMENT AND COAL MINING COMPANIES HAVE A MORAL AND LEGAL OBLIGATION TO RECLAIM SURFACE-MINED LAND IN ENVIRONMENTALLY HAZARDOUS CASES. HOWEVER IN DOING SO, IT IS ALSO VITAL THAT THE SMALL FARMERS' LAND IS NOT FORGOTTEN. IT IS THE SMALL FARM SITES WHICH CONCERN ME. WHILE THESE SITES ARE NOT ALWAYS AN IMMEDIATE HAZARD TO THE ENVIRONMENT OR ARE NOT CURRENTLY DANGEROUS TO THE HEALTH OF HUMANS OR LIVESTOCK, THIS UNRECLAIMED LAND IS |