With Coal Crashing, Will Polluted Communities Be Left Holding the Bag?
Federal law requires coal companies to clean up and reclaim toxic mining sites. But what happens when a coal company's gone bankrupt?
Ugly, shuttered strip mines leftover from coal's heyday are scattered across the American landscape from Appalachia to Illinois—and the industry's plummeting fortunes means that companies may skip out on their obligations to clean up those toxic eyesores, the Washington Post reported on Friday.
Under 1977 federal legislation, coal companies are required to rehabilitate the landscape—both aesthetically and environmentally—once the mine is no longer in use. However, as the coal industry dies, looming bankruptcies could allow companies to evade that law.
"Bankruptcy restructuring could provide coal companies with a way of escaping obligations to restore land," the Post observes. The suffering, sickened communities left in coal's wake would then be left without recourse.
The scope of the problem is alarming, industry insiders say. "It really is striking that virtually every large U.S. coal producer is bankrupt or on the cusp of bankruptcy," Pavel Molchanov, an energy analyst at the advisory firm Raymond James, commented to the Washington Post.
The Post reports on the threat the bankruptcies pose to mine reclamation:
A number of smaller [coal mining] companies have defaulted or skimped on cleanup obligations, leaving behind abandoned strip mines and denuded mountains. Some are simply eyesores, unhealed scars on the landscape that can be seen for miles. Others are perpetual sources of water pollution, slowly leaking acidic and otherwise toxic wastes into streams and groundwater supplies.
Now coal giants are facing outcomes similar to those experienced by some of the smaller companies. Several are struggling to make payments on debts for ill-timed multibillion-dollar acquisitions of their rivals in recent years. On top of that, they have been financially squeezed by competition from cheap natural gas and declining U.S. and Chinese demand for coal.
The biggest coal companies typically pay third parties to ensure that mine sites are cleaned up in the event of financial hardship. But in recent years, many coal companies have relied on a cheaper technique called "self-bonding," pledging only their own names and financial wherewithal to guarantee their cleanup obligations.
"Peabody alone has cleanup obligations of nearly $1.4 billion guaranteed by self-bonding, according to statements filed by the company last year with the Securities and Exchange Commission," the newspaper notes.
"Peabody Energy teeters on the brink of bankruptcy," as historian and journalist Jeff Biggers writes on Friday, "edging toward a Chapter II reorganization that will most likely allow it to walk away from massive reclamation and mine worker commitments."
Even before the recent decline in coal industry fortunes, these fossil fuel behemoths have been shirking their reclamation obligations for years, an environmental group discovered.
"Of 450 square miles of disturbed land in Montana, North Dakota and Wyoming," the National Resources Defense Council (NRDC) found in a report (pdf) published last year, "only 46 square miles" demonstrated the legal reclamation requirement of "successful establishment of vegetation and soils to satisfy permit requirements for post mining land uses."
Critics argue that these companies should be destined for criminal court, not bankruptcy court, and forced to uphold their end of the bargain.
"From Appalachia to Illinois to Black Mesa in Arizona to Montana and the 20 coal-mined states, a health and humanitarian crisis from the lethal fallout of decades of mining continues to rage under the auspices of flawed regulatory measures, blatant disregard for civil rights, and media indifference," Biggers writes. "And it ain't going away, even after Mr. Peabody packs up his last taxpayer-funded draglines and bulldozers, and the parade of well-meaning environmentalists moves elsewhere."
"You're left with a trashed landscape and contaminated water," said Sharon Buccino, director of the NRDC’s Land and Wildlife Program, to the Washington Post. "We should not have to sacrifice the health of the land and its residents to the financial health of coal companies."