The prevention of future acid and toxic discharges from coal mining operations into surface and ground waters and the remediation of mining-related pollutional discharges are high priorities of the Office of Surface Mining Reclamation and Enforcement (OSM). To advance these priorities, OSM established the Appalachian Clean Streams Initiative, the Acid Drainage Technology Initiative, and established an AMD Policy Statement to address the need for policy goals, objectives, and strategies to protect the hydrologic balance in coal mining areas from the effects of AMD.

In a continuing effort to address AMD-related issues, OSM contracted with Tetra Tech EM, Inc., to evaluate the financial considerations associated with bonding long-term treatment of AMD. OSM is making three Tetra Tech reports available as part of its commitment to technology transfer. The reports do not represent OSM official guidance or policy. Should OSM decide to adopt all or portions of the reports as official guidance or policy, OSM will do so through the appropriate administrative process. The reports are listed below along with a brief description of content. To download a report (in Adobe Acrobat .pdf format), simply click on the highlighted title.

1. Methodologies for Estimating the Costs of Treatment of Mine Discharges (February 28, 2000)

The report sets out a comprehensive framework for estimating site-specific treatment costs. Tetra Tech developed cost estimating techniques for all aspects of treating discharges, providing a number of modules (work sheets), each calculating costs associated with a specific element or component of treatment systems. For any given type of existing or proposed treatment system, the user selects those modules that apply, and simply completes line items within the modules applicable to site specific conditions. The standardized costs may be used, but should be verified locally for site-specific application in costing out each component of the treatment system, including construction, operation and maintenance costs. A flowchart was also developed to assist in selecting the most appropriate treatment methodology, given water data and other site-specific considerations.

2. Sensitivity Analysis of the Methodology for Estimating the Costs of Long-Term Treatment of Mine Drainage (June 15, 2000)

Tetra Tech analyzed the relationship of the initial amount of monies needed in an interest bearing financial instrument designed to fund AMD treatment, against inflation, interest rates, net rates of return, and the number of years treatment was to be provided. This provides an assessment of the sensitivity of the initial start up fund to these factors and how these factors affect the financing of treatment costs over the long term. The analysis found that the net rate of return had a greater impact than the number of years of treatment. For most net rates of return, the initial amounts needed to set up a viable treatment fund ranged from 20-30 times the annual treatment cost (including capitalization costs). The higher the projected rate of return, the less initial amount of money needed to establish an adequate long-term, income producing revenue source, such as a trust fund. 

3. Final Report of the Feasibility of Using Various Financial Mechanisms to Demonstrate Financial Assurance for the Long-Term Treatment of Acid Mine Drainage (June 21, 2000)

This report assesses a number of financial instruments as alternatives to traditional surety and collateral bonds, for their viability with respect financing long term treatment costs (including instruments such as escrow accounts, trust funds, annuities). Tetra Tech researched other laws that involve financing long-term liability and the types of financial instruments used to address treatment costs. The report provided a list of desirable attributes for these type of financial instruments and used those attributes to then assess various financial instruments for their viability. The report makes specific recommendations on certain financial instruments as the most suitable for use in financing long-term treatment costs.