Officials: Frac Sand Companies Could Exploit Loophole To Avoid Filling In Mines

A concerned citizen in Eau Claire County says a loophole in state law could allow frac sand companies to avoid the costs of reclaiming their mines. County officials have investigated the claim and say he’s right.

State law requires that frac sand companies and gravel pit owners to set aside money so that even if they go out of business, they’ll pay to fill in their mines. This is done with bonds, or what are called irrevocable letters of credit.

Insurance agent Mark Wise, of Fall Creek, said the state’s mine reclamation law has a loophole that’s been overlooked.

“Where the issue comes in is the state statute allows the bonding company or the bank to cancel that letter of credit or bond with 90-day notice,” Wise said.

County officials can fight the cancellation by proving the mine has failed to reclaim its land. But, if the mine hasn’t closed yet, Wise said that’s impossible to prove, leaving county taxpayers with the bill.

“So, the short answer is there is financial assurance, but it’s financial assurance that’s of no value,” he said.

Eau Claire County attorney Keith Zehms said Wise is right and taxpayers in counties across Wisconsin could be on the hook for millions of dollars.

“The potential worst-case scenario could happen anywhere where there’s large-scale non-metallic mining,” Zehms said.

Zehms said there are things counties can do to protect themselves. He said they’re looking into requiring frac sand companies to post cash deposits and change local ordinances to get around the loophole in state law.

“That’s really what we’re looking at doing and then providing information and analysis to the committee on planning and development for their determination as to where they want to go with it,” he said.

Zehms said officials hope to present a list of options to county board supervisors in late summer.