Federal Regulator Urges States to Deny Coal Development Permits Without Real Insurance

It’s the ultimate Catch 22 for coal companies: They can’t dig for coal unless they have the permits to do so. Yet, they can’t afford to cover the insurance necessary to guarantee they clean up the sites when they are done. That money is needed to explore and pay workers, which the industry says is more urgent.

But this week the Interior Department’s Office of Surface Mining, Reclamation and Enforcement asked the states to deny their ability to explore if they self-bond, which is to basically self-insure. Basically, the coal companies are broke and don’t have the monies set aside, the agency says.

It’s not an academic point: Alpha Natural Resources, Arch Coal and Peabody Energy all declared bankruptcy in the last year or so, although they are all expected to emerge smaller and better financed companies. But if they can’t meet the clean up obligations, the responsibility falls on taxpayers.

It is up to the states to decide. And even those coal-heavy states don’t want to have ugly blights on their hands if the sites can’t be cleaned up at company expense.

And it’s no small sum: almost $3.6 billion in self-bonds are outstanding from Alpha Natural Resources, Arch Coal, Cloud PeakEnergy and Peabody Energy, says the Natural Resources Defense Council. Altogether, the United States has been working to clean up more than 500,000 acres that were abandoned before the bonding law took effect in 1977 at a cumulative cost of potentially $12 billion.

“Lack of global demand for coal, competition from low cost shale gas and the unprecedented and continuing retirement of coal-fired power plants are clear signs that the energy industry is undergoing a major transformation and it is incumbent upon OSMRE to protect the public’s interest,” said Joe Pizarchik, the coal agency’s director, in a statement.

“As the era of Big Coal comes to an end, we must do more to ensure coal companies live up to their obligations to coal communities across the nation by cleaning up scarred landscapes and destroyed watersheds, and restoring public lands we all hold in trust,” adds Sharon Buccino, Director of Lands at the Natural Resources Defense Council.