March 16, 2016 Categories: Fossil Fuels

Too Big to Fail: Coal Edition

Introduction: Big Coal Is Going Bankrupt—And Wants Taxpayers To Clean Up The Mess

The coal industry is in structural decline. As the world transitions to cleaner, safer, and less expensive energy sources, the end for Big Coal may be coming sooner than many expected.

But for decades Big Coal has free reign to dump carbon pollution into our atmosphere without paying for the cost to our health and our climate. Now, we may soon be faced with the burden of paying for the massive clean-up bill that coal companies have racked up from the direct damage they’ve done to our lands, too.

That is, unless state governments and the United States Department of the Interior step up and rigorously enforce laws requiring coal companies, not American taxpayers, to pay for the clean up.

Join us in urging Secretary Jewell to hold coal companies accountable by signing this petition.

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Coal Mining is a Dirty Business

Big Coal has left a scarred and degraded landscape in every place that it has touched. On lands owned by the American public, where about 40 percent of the coal we use comes from, these scars are particularly deep. Wyoming’s North Antelope Rochelle mine alone has already disturbed over 42,000 acres and may reach 70,000 acres.

Restoring areas of this size to anything like their original condition is both required by law and an important source of jobs and income for local residents long after mining is completed. Coal companies agree to take on this clean-up responsibility when they purchase mining rights from the American people, but now they’re trying to get out of it.

By law, coal companies are required to repair this damage as they go, in a process called “contemporaneous reclamation.” In practice though, 90 percent of the land coal companies have disturbed remains unreclaimed. When these companies go out of business without making good on their reclamation commitment, we are left with either permanent scars on the landscape or having to pay for the cleanup—unless we make sure the companies pay up front.

The Self-Bonding Giveaway

This isn’t how it’s supposed to work. In order to protect taxpayers from paying for cleanup costs, coal companies are supposed to post bonds large enough to cover the costs of reclamation. These bonds are supposed to work more or less like a security deposit on an apartment. If you leave your apartment in good shape, you should get your deposit back, plus interest. If you leave it dirty or damaged, your landlord might keep the deposit. Reclamation bonds work the same way: If the company goes out of business without having reclaimed the land, the government cashes in the bond to cover the clean-up costs.

E&E Self Bonding

But some states, including Wyoming (which produces 40% of all the coal mined in the United States), allow some companies to get away with a so-called “self-bond” instead of a real, secured bond. While a secured bond works more or less like your apartment deposit, self-bonds are more like a handshake. Companies promise to pay eventually, but they don’t set aside the money to actually do so, which leaves more money available to spend on lavish salaries and multimillion-dollar bonuses for executives, even on the eve of bankruptcy.

That’s exactly the situation we’ve reached now.

 

End the Handouts to Big Coal

Last year, Wyoming belatedly realized its mistake in allowing Alpha Coal to self-bond, and required the company to obtain real bonds to cover its reclamation obligation. Unfortunately, it was too late. Alpha had already hemorrhaged so much money that it could not afford surety bonds. Shortly after that, Alpha declared bankruptcy: the company no longer had enough money to pay its debts, including its debt to the American people. Wyoming had the chance to prevent this situation by requiring real bonds earlier on, but instead they relied on a handshake.

Companies are still legally obligated to pay for the clean-up, but when a company goes bankrupt, and is out of money, there is nothing left for the state to collect. This is exactly what is happening right now with two of the three largest coal companies in the country now in bankruptcy: Arch Coal and Alpha Natural Resources have both struck deals with Wyoming and West Virginia that may result in the companies paying only a small fraction of their clean up costs.

The rest will fall to you and me.

Now Peabody Energy, owner of the North Antelope Rochelle mine and the largest private-sector coal company in the world, is on the verge of bankruptcy. Peabody owes about $2 billion in reclamation obligations, of which nearly $1.5 billion is self-bonded. Citizens have taken legal steps to alert states to the risk they run by allowing Peabody to continue to self-bond, but despite the risk to taxpayers, some states are perfectly happy to let self-bonding continue.

Sally Jewell, Secretary of the federal Department of the Interior, has the power to end this needless giveaway to coal companies. In addition to pressing the claims of the American people in bankruptcy court, the Department of the Interior has oversight responsibility both with the coal companies and with the states that enforce reclamation laws. But she needs to hear from you.

Tell Secretary Jewell to close the self-bonding loophole and make sure states enforce the law requiring coal companies to clean up their pollution. Taxpayers shouldn’t have to foot the bill for Big Coal’s mess.

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