Grijalva, Dingell, Cartwright: New Guidance Brings Outdated Coal Industry Self-Bonding Standards Closer to Extinction
Washington, D.C. – Rep. Debbie Dingell (D-Mich.), Ranking Member Raúl M. Grijalva (D-Ariz.) and Rep. Matt Cartwright (D-Pa.) today hailed the recently announced guidance from the Office of Surface Mining, Reclamation and Enforcement (OSMRE) to state environmental agencies urging strict reviews and new limits on the use of so-called self-bonding, which allows coal companies to put taxpayers at risk for the cost of mine cleanups. The guidance follows many of the recommendations put forth in a June 10 letter the three lawmakers sent, along with eight of their House Democratic colleagues, to Interior Secretary Sally Jewell.
Some states, including major coal-producing states like Wyoming, allow mining companies to conduct operations after promising to cover cleanup costs if and when they arise without setting aside sufficient capital ahead of time. Such an agreement, known as self-bonding, has come under intense scrutiny as major coal companies continue to declare bankruptcy, as Peabody Energy did on April 13.
As the lawmakers noted in their letter to Jewell, Peabody had $1.47 billion in self-bonding obligations spread across Wyoming, Illinois, Indiana, Colorado and New Mexico. The company is unlikely to fully bear those costs, increasing the chance of taxpayer-funded cleanups.
Among other recommendations, the June 10 letter urged the Department of the Interior, which oversees state-level coal self-bonding programs, to block companies with recently declared bankruptcies from qualifying for self-bonding; to urge state authorities to conduct a thorough financial review of all current self-bonds; and to support states that opt to discontinue self-bonding.
The new guidance closely tracks those recommendations. It says that companies less than five years old should not be allowed to self-bond because they have not established long-term financial viability. It calls for a thorough state-level review of each self-bond and says that states should direct financially weak companies to replace self-bonds with material assets.
Ranking Member Grijalva said the new guidance restored balance to a coal industry that has spent years putting taxpayers at financial risk.
“We’ve seen with the ongoing run of industry bankruptcies that self-bonding is not a realistic policy, and it should be ended across the board,” Grijalva said. “In the meantime, following this guidance will save taxpayers money and make the coal industry more financially transparent. Every state should review each self-bond as soon as possible and make sure any company that left a mess behind cleans up after itself instead of sticking taxpayers with the bill.”
“The recent bankruptcies, from Peabody Energy to Alpha Natural Resources, have demonstrated exactly why coal companies with weak balance sheets – no matter how large they are – should not be allowed to self-bond,” Rep. Dingell said. “Until a long-term solution is reached, this guidance from the administration will help protect taxpayers and ensure they’re not left on the hook for billions in cleanup costs if a big miner goes bust.”
“This guidance from OSMRE is a step in the right direction towards ending the practice of self-bonding,” Rep. Cartwright said. “While many states currently ban the practice of self-bonding, I urge the rest of the country to review their current self-bonding practices, and follow suit.”
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