WildEarth Guardians

Tuesday, August 16, 2016
Guardians Spurs Obama Administration to End Coal Industry Breaks, Ensure Mines Pay for Clean Up

WildEarth Guardians Petition Granted, Will Ensure Coal Companies Pay Up and Guarantee Reclamation
Contact: Jeremy Nichols, (303) 437-7663, jnichols@wildearthguardians.org

Washington, D.C.—Responding to a petition filed by WildEarth Guardians, the U.S. Office of Surface Mining Reclamation and Enforcement today announced it intends to overhaul regulations to ensure coal companies fully pay for the cost of cleaning up their mines.

“For too long, the coal industry has put the costs of cleaning up its mines on the backs of Americans, threatening to saddle our future with a toxic legacy,” said Jeremy Nichols, Climate and Energy Program Director for WildEarth Guardians.  “Today’s decision is a major step forward and puts us on track to ensure coal companies pay the cost of cleaning up their mess, not force Americans to shoulder this burden.”

The decision comes as some of the nation’s largest coal companies, including Peabody and Arch, have filed for bankruptcy and the coal industry as a whole is facing an increasingly bleak future. Nationwide, coal production is expected to hit a 50-year low in 2016 and companies are increasingly shuttering or reducing operations and laying off workers.

Under federal law, coal companies have to post a bond to guarantee the cost of cleaning up their mines, effectively an insurance policy to ensures the burden of reclamation does not fall to taxpayers.  Federal regulations currently allow companies to post “self-bonds,” effectively corporate IOUs, to satisfy bonding requirements.

The practice has been called into question as several companies relying on self-bonds, including Peabody, Arch, and Alpha, have fallen into bankruptcy, making their IOUs worthless.  The prospect of companies folding and walking away from their operations is higher than ever, threatening to dump billions of clean up liabilities onto the public.

For Peabody, the nation’s largest coal company and largest holder of self-bonds, the situation is dire. The company has more than $1 billion in self-bonds in Illinois, Indiana, New Mexico, and Wyoming.  After filing for bankruptcy in April 2016, the company technically cannot back up these clean up guarantees with even a penny.

In spite of this, states like New Mexico and Wyoming are continuing to allow Peabody to self-bond, claiming the current rules allow them to do so.

In March of this year, WildEarth Guardians petitioned the Office of Surface Mining Reclamation and Enforcement, which regulates coal mining nationwide, to amend its regulations to ensure that bankrupt companies aren’t allowed to self-bond.  Today, Joe Pizarchik, the Director of the Office of Surface Mining Reclamation and Enforcement, granted the petition, announcing it intends to move forward to make changes to its regulations.

In a statement, Director Pizarchik announced:

We know more today about financial assurance than 35 years ago and our current out-of-date self-bonding regulations aren’t working as intended. Together with state regulatory authorities that allow, or are considering allowing self-bonds as a form of financial assurance, we can write a better rule, and together we can protect the public’s interest and the environment.

The announcement will be followed by a proposed rule change, which will be subject to public comment, and then the adoption of a final rule.  For states like New Mexico and Wyoming, which continue to allow bankrupt coal companies to self-bond, they will be required to secure actual sureties that fully guarantee mine clean ups.

“We applaud the Obama Administration for moving quickly to ensure bankrupt coal companies are no longer allowed to avoid guaranteeing reclamation of their mines,” said Nichols.  “For our climate, our lands, and our future, the coal industry has to start paying the true cost of its mining, not passing the buck to Americans.”