In a report presented to the joint Post Audit Committee, legislative auditors contend that the state Division of Environmental Protection has been skirting a law designed to make sure that coal mine reclamation bonds are on solid financial ground.

Coal companies have to get the bonds to guarantee the land will be repaired once the mining is over.

But, the audit report says the DEP ignored a stipulation that said insuring agencies have to be approved by the U.S. Treasury with a T-Listing. That certifies the insurers have suitable assets and financial practices.

First Surety Corporation got into the business in 2006 and insures hundreds of bonds worth about 48 million dollars. However, the agency does not have the financial credentials that auditors say the law requires.

“The legislature is very committed to requiring a T-Listing for these bills, surety bonds and so forth, that protect the land in West Virginia as its being mined for coal,” West Virginia Senate President Mitch Carmichael, (R) Jackson, said.

The DEP’s general counsel says the agency interprets the law as having two paths to insure the reclamation bonds. One is for a company to have a T-Listing, the other is by the permission of the West Virginia Insurance Commissioner.

Carmichael questioned the lawyer about the DEP’s stance.

“Mr. President, my testimony is that the agency thought that there were two avenues pursuant to that rule by which a company would be allowed to submit surety bonds to the state,” Jason Wandling, General Counsel for the W.Va. DEP said.

“And one of those avenues would be, would not include T-Listing?” Carmichael asked.

Wandling replied, “That’s correct Mr. President.”

“I’m at a loss as to how you obtain that understanding of it,” Carmichael said. “I accept that you have to say that.”

The legislative auditor says insuring reclamation surety bonds without a T-Listing has a four-year time limit and that First Surety Corporation’s four-year grace period expired in 2010.

“Our view is that that stopped in 2010,” Aaron Allred, W. Va. Legislative Auditor said. “And that DEP has allowed this company to continue to issue mine reclamation laws in violation of state law now for nine years.”

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