Greens push Interior to overhaul bonding for mine projects

By Dylan Brown | 07/20/2016 01:27 PM EDT

Environmentalists presented federal coal regulators with a check for $3.86 billion today to mark the end of the public comment period on potential reforms to the controversial practice of self-bonding.

Environmentalists presented federal coal regulators with a check for $3.86 billion today to mark the end of the public comment period on potential reforms to the controversial practice of self-bonding.

The mock payment would cover all outstanding self-bonds nationwide. Those are corporate assurances based on a company’s healthy finances that replace third-party bonds or sureties to cover potential mine cleanup costs if a company should fold.

"The check is to remind [regulators] that local taxpayers and working families could be on the hook for this enormous sum because of shortsighted policies," Mary Anne Hitt, director of Sierra Club’s Beyond Coal Campaign, said yesterday.

A symbolic check presented to federal regulators in protest of coal company mine cleanup promises that environmentalists worry taxpayers will ultimately have to pay. | Image courtesy of the Sierra Club.

Activists gathered at the Interior Department’s Office of Surface Mining Reclamation and Enforcement headquarters in Washington, D.C., today as the agency began to review thousands of comments gathered since May. OSMRE requested the input after complaints about self-bonding amid a slew of mining company bankruptcies (E&ENews PM, May 18).

The agency will, based on the comments, determine whether to propose a rule to alter self-bonding regulations under the Surface Mining Control and Reclamation Act. Hitt called on OSMRE to immediately advise states not to continue the practice.

But only Congress can ban self-bonding nationwide. Leading critic Sen. Maria Cantwell of Washington, top Democrat on the Energy and Natural Resources Committee, has sponsored S. 3066 to phase out and ban self-bonding (Greenwire, June 16).

Not ‘one mouthful’

The Sierra Club and Natural Resources Defense Council spent five figures on a digital advertising campaign to highlight the risks of abandoned mines.

Wyoming rancher L.J. Turner said nearby coal mining had already damaged the grass and natural springs that his family’s cattle have relied on for three generations.

Turner’s grazing permit abuts the nation’s two largest coal mines: Peabody Energy Corp.’s North Antelope Rochelle site and Arch Coal Inc.’s Black Thunder mine.

"We were told that after the mining and reclamation, our cows would eat the best grass they could get anywhere," he said. "Thirty years later, they haven’t had one mouthful of reclaimed grass."

Turner worries the companies, both battling bankruptcy, will leave behind the same toxic legacy as the hundreds of abandoned uranium mines around the West.

Coal companies have repeatedly pointed out that bankruptcy has not interrupted ongoing reclamation work, touting their recent environmental records.

OSMRE earned scorn from environmentalists after acquiescing to the National Mining Association’s request to extend the 30-day comment period by 60 days.

"There are obvious problems with the current self-bonding rules, and it’s disgraceful that OSM continues to let the coal industry delay and derail fixing these rules," said WildEarth Guardians’ Jeremy Nichols.

‘Political in nature’

Sierra Club attorney Peter Morgan rejected arguments that coal’s collapse since 2011 didn’t give federal and state regulators enough time to begin the transition away from self-bonding, pointing to Patriot Coal Corp.’s first bankruptcy in 2012.

Since Patriot, three coal giants holding about two-thirds of all the nation’s self-bonds have gone bankrupt: Alpha Natural Resources Inc., Arch and Peabody.

"The broader economic trends affecting the coal industry have effectively rendered all coal companies insolvent and therefore just not capable of carry out on a promise," Morgan said.

Companies note that states approved their self-bonding right up until bankruptcy because subsidiaries, legally, held their reclamation liabilities.

During bankruptcy, companies no longer qualify for self-bonding, but state regulators could only secure relatively small guaranteed payments in case they don’t survive.

Morgan said the "super-priority" deals amount to "blackmail" because companies told states that replacing all self-bonding during bankruptcy would cause liquidation, leaving taxpayers with a larger bill.

Companies plan to replace self-bonding after emerging from bankruptcy, but in the case of Alpha — the first company expected to reach that milestone — OSMRE took Wyoming to task for not doing more about $411 million in self-bonds earlier in the process (E&ENews PM, July 13).

The Wyoming Department of Environmental Quality called its Alpha settlement "lawful in every respect."

With all company finances in limbo during bankruptcy, state regulators said replacing self-bonding sooner would have been "unreasonable and "infeasible" for Alpha.

"In the end, a successful bankruptcy is the most effective and expeditious mechanism available to force substitution without injuring the public," Land Quality Division Administrator Kyle Wendtland wrote in response to the federal agency’s admonishment.

Wyoming’s DEQ also accused OSMRE of exceeding its oversight authority.

"It is apparent from the timing that this action by OSMRE is political in nature and serves little if any purpose in resolving this complex matter that involves the very livelihood of the miners in Wyoming," Wendtland wrote.