Despite the economic woes and near-bankruptcy of the ailing coal industry, companies have been tasked to spend for cleaning up the mines in which they operated, the U.S. Interior Secretary said Tuesday.
Under U.S. federal law, mining companies must allocate money to fund reclamation and cleanup drives. While companies guarantee payment through surety bonds, the government also pitches in to help and allow companies to maintain good financial standing. A taxpayer subsidy called "self-bond" has allowed companies to waive a large part of the indemnity.
Bankrupt coal mining firms Alpha Natural Resources and Arch Coal have sought favorable judgment from the bankruptcy court to allow them to forego their cleanup liabilities due to insolvency. However, Interior Secretary Sally Jewell has made it firm that the government will not allow such leniency.
"Even at a time of financial distress, it is still the responsibilities of these companies to do the reclamation that they signed up for," Jewell said, via Reuters.
Jewell added that mining firms should be held accountable for their actions.
The Department of the Interior's goal is to protect taxpayers from $3.6 billion in self-bonding liabilities, thus urging the companies to cover restoration efforts.
This move is being faced with concerns, particularly with the firms' ability to make good on their liabilities as they face trying economic times.
According to Midwest Energy News, Tom Sanzillo, finance director of the Institute for Energy Economics and Financial Analysis, the responsibility attached to mining companies would be washed away if they declare bankruptcy. If bankruptcy proceedings are decided in their favor, there's a looming possibility that their commitments would be largely reduced, leaving taxpayers with the bigger financial burden.
The state of Wyoming has granted temporary relief to bankrupt coal firm Arch Coal, STL Today reported. In a bankruptcy proceeding, Arch Coal was required to shell out only $75 million for cleanup costs in the meantime. Since Arch's total liability amounts to $485.5 million, it will settle the remaining amount with new bonds once it recovers from bankruptcy.
A similar deal was agreed upon by Wyoming and Alpha Natural Resources, in which the latter promised to pay $61 million to contribute to $411 million in cleanup efforts.
The unpaid balance is currently being covered by self-bonds.
Sanzillo commented that if the price of coal is not enough to compensate for the damage done to the environment, the mines should be closed since the industry is no longer seen as sustainable and stable.
