Surface coal mine restoration: final report to opencast coal task force

EXECUTIVE SUMMARY

A. This report compiles the work of the Opencast Coal Task Force Compliance and Finance sub-groups; set up during 2014 to implement change and consider the outcome of a public consultation on Opencast Coal Restoration: Better Regulation. A summary of the consultation's main findings is in Annex C. The outcomes and recommendations in the report are aligned with the planning reform and better regulation agendas. Sub-group meetings benefitted from input by contributors in or close to the energy minerals, finance, audit, environment and community sectors.

B. The groups have received and considered advice on:

• the land use planning context
• secondary planning legislation introducing mine monitoring fees
• planning procedure options open to Scottish Ministers
• mine progress plans
• primary authority, the idea of mandatory "advice" and shared services
• national standards
• the filling of skills gaps amongst planning authorities
• bank guarantees, the de-risking of parent company guarantees, the health of and prospects for the insurance bond market
• landowner liability

C. It is clear from reviewing existing planning legislation, policy and guidance that there is in place a regime that if followed correctly would ensure competent monitoring and effective compliance. This has been described as the use of "the tools in the box". In practice there were substantial restoration shortcomings at several sites brought about by poorly managed operations ahead of the insolvencies of two major companies. They are no longer operating in the sector. Remaining and new operator practice and planning authority practice has improved. The sub-groups recognise the opportunity to provide further assurances to local authorities, the industry, communities and Scottish Ministers. We have looked at where the existing compliance framework can be augmented consistently across Scotland also drawing on practice from elsewhere.

D. The skills gap across the local authorities will be addressed in the actions arising from this report supported by additional funding and a climate of co-operation. However skill-sets including financial and legal will need to be embraced if all that this report proposes is to be implemented effectively. This signals a move towards a more consistent approach to all aspects of surface coal mining in the form of national and best practice standards. Scottish Government, stakeholder involvement or oversight, and others should be involved directly with assistance (perhaps mandatorily where appropriate) where that is necessary. Visibility over these enhancements is crucial to Scottish Ministers. The Task Force has benefitted from regular site by site feedback from industry and from the local authorities on surface coal mining activity. We recommend that should be built on by adopting a simple structured approach to periodic reporting.

E. In terms of financial assurance both the financial marketplace and the risk appetite of existing suppliers has changed so we have looked at alternatives that will give local authorities and others the level of assurance they require. Bank Guarantees are a new instrument that should be taken seriously in some cases as a replacement for insurance bonds where are no longer available in a form that gives long term assurance. Bank guarantees also ensure that financial due diligence has been done on the developer by the bank but they are flexible enough to change as required. They are also used widely in other commercial environments for this purpose. Other financial instruments remain on the menu. However rather than each local authority preparing a guarantee for each site, this is an area where a single standard guarantee format and documentation will be developed for common use. Due diligence, up-skilling and resourcing amongst the local authorities is also highlighted. Local authorities will wish to ensure or take advice that financial institutions offering bank guarantees are sound. It may also be possible to signal which banks would be deemed acceptable to issue the guarantees. Further work with Scottish Futures Trust is envisaged.

F. The groups have considered the detail of and case for an independent compliance unit or a shared-services approach. The report concludes that the favoured approach is more to do with consistency and the availability of assistance and documentation to call on when needed than about a central unit. The Scottish Government is working with Heads of Planning Scotland and the local authority Improvement Service through grant funding on training and support for joint working amongst planning officers in coalfield authorities. We aspire to 'national standards' which will be needed both to ensure good practice across the local authorities and that they have knowledge and expertise to turn to in order to carry out their obligations. Heads of Planning Scotland is already paving the way in some areas on which we will collaborate.

G. The report is evidenced throughout with sub-group minutes (set out in full at Annexes E and K) and consultation analysis findings. The report takes account of sub-group feedback on a December 2014 draft; a commitment at the 16 December 2014 Task Force to revisit its contents; followed by further sub-group representative meetings in April 2015 to enhance visibility and oversight for Scottish Ministers and actions on restoration bank guarantees. A political consensus on the report by COSLA was also reached ( Annex K refers). The report also reflects the wider concerns of communities well experienced with living in the vicinity of surface coal mines day-to-day. It reflects sub-group and Task Force sentiment about the provisions that could be put in place that would be seen to be making a real difference.

H. There remain areas of disagreement but there is also consensus on many of the report's recommendations. All of these will require further work and the sub-groups have developed a spirit of collaboration which will serve that process well. The Task Force endorsed the report at its 28 October 2015 meeting. A project plan within Scottish Government has been developed to take recommendations forward during 2015/16 and progress will be publicised on-line.