Taxpayers left with costs of mines cleanup as coal companies go bankrupt

As coal companies sink into bankruptcy, who will pay to clean up their old mines? Peabody is the latest to make big promises to a bankruptcy judge. VOX David Roberts on September 2, 2016, In the context of US capitalism, corporate bankruptcy has become less an admission of failure or a final chapter than a kind of R&R, a chance to shed some flab and come back stronger. As anyone who has followed Donald Trump’s career knows, a big company declaring Chapter 11 bankruptcy is like Lindsay Lohan checking into rehab. They’ll be back.

So it is with Peabody Energy, the world’s largest private coal company, which entered bankruptcy back in April. It is currently undergoing its bankruptcy spa treatment — shedding workers and retirees, their health and pension benefits — and preparing to get back to work (or so it hopes).

In the case of Peabody and other coal companies, however, there’s another sort of flab, er, liability at issue, for which there is less precedent in bankruptcy court: namely, environmental remediation obligations.

Put more simply: Who’s going to pay to clean up all those old mines?

Coal companies promise to pay for mine cleanup, really and for true

The Surface Mining Control and Reclamation Act of 1977 says that coal companies have to clean up old mines and reverse their environmental damage, costs which can run to the hundreds of millions. Before they receive a permit for a new mine, coal companies have to prove that they can afford to clean it up. They do so by posting a bond.

These days, however, coal companies rarely have to meet this requirement. Instead, they are allowed to “self-bond,” which amounts to promising the states they operate in that they can pay for mine cleanups.

This cozy arrangement between coal companies and state regulators is longstanding, but it has come under increased scrutiny lately, as coal companies have tried to use bankruptcy to squirm out of those obligations. Wyoming just struck a deal with (bankrupt) Arch Coal to “accept up to $75 million in place of the company’s $486 million in bonding obligations.” That means if Arch Coal liquidates, Wyoming is first in line to collect at least $75 million in assets.

Who will cover the $411 million in remaining cleanup costs? Taxpayers.

And it’s not an isolated case; there’s a lot of dough at stake. In addition to the $9 billion in mine cleanup costs already outstanding under the Abandoned Mine Land Program(covering mines abandoned before 1977), “officials estimate that roughly $3.6 billion in self-bond liabilities could fall to taxpayers.”

That would amount to a $3.6 billion subsidy to big coal, the latest (maybe the last?) in a century-long tradition of subsidies.

Worries about self-bonding led WildEarth Guardians and other environmental groups tofile a petition to the Office of Surface Mining Reclamation and Enforcement (OSMRE) in March, asking the agency to ensure that “companies with a history of financial insolvency are not allowed to self-bond coal mining operations.”……..http://www.vox.com/2016/9/2/12757074/coal-bankruptcy-mine-cleanup