May 19, 2016 Read More →

‘Concerned About Self-Bonding, Top Federal Mining Regulator Wonders About Collusion’

By Benjamin Storrow in the Casper Star Tribune:

The top federal mining regulator expressed “grave concerns” with the country’s coal reclamation program on Wednesday and openly questioned whether states and mining firms were colluding to avoid their cleanup obligations.

Joe Pizarchik’s comments represent a notable escalation in the debate over self-bonding, or coal companies’ unsecured cleanup liabilities. The director of the U.S. Office of Surface Mining Reclamation and Enforcement has kept a low public profile since questions began to mount last year over mining firms’ ability to pay for reclamation.

But in a conference call with reporters Wednesday, Pizarchik said a wave of bankruptcies called the self-bonding program into question. Self-bonded companies are allowed to post their assets as collateral on future reclamation costs, provided they can pass a financial stress test.

Two companies, Arch Coal and Peabody Energy, notably retained their self-bonding status in Wyoming right up until they filed for bankruptcy.

“People are concerned whether disturbed coal mines will be reclaimed by the bankrupt companies, whether the bankrupt companies will use bankruptcy court proceedings to abandon their legal obligations to restore the land and water, whether the cost to restore the land and water will be shifted to taxpayers, and whether the existing regulations are adequate to protect people, society and the environment from the adverse effects of coal mining, as was envisioned by Congress when it enacted (the Surface Mining and Reclamation Act) nearly 40 years ago,” Pizarchik said.

Self-bonding has emerged as a national issue in recent months, as mining firms filed for Chapter 11 and environmentalists voiced concerns about companies’ ability to pay for cleanup.

Yet it is arguably most pressing in Wyoming, the country’s top coal mining state, where three bankrupt mining firms have a combined $1.6 billion in self-bonds…..

Pizarchik, in his remarks, did not single out any state for criticism. But he did applaud states that have transitioned away from self-bonds.

In 2014, Texas required a subsidiary of Luminant Mining to replace $1.01 billion in self-bonds with cash bonds. Colorado regulators last month required Peabody Energy to provide replacement bonding for $27 million in cleanup costs.

“Why were the states like Texas and Colorado successful in getting replacement bonds from bankrupt companies, and other states did not,” he said. “Was there any kind of collusion, malfeasance out there? I think the public needs to know the answers to those questions.”

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