After Months of Urging, Dingell, Grijalva and Cartwright Hail Office of Surface Mining Revisiting of Anti-Taxpayer Coal Bonding Rules

Washington, D.C. – After months of urging, Reps. Raúl M. Grijalva (D-Ariz.) and Debbie Dingell (D-Mich.) – the ranking members of the House Natural Resources Committee and the committee’s oversight panel, respectively – and Rep. Matt Cartwright (D-Pa.) hailed the newly announced Office of Surface Mining Reclamation and Enforcement (OSMRE) decision to reconsider “self-bonding” rules that allow coal companies with weak balance sheets to transfer millions of dollars in cleanup costs to taxpayers if they go out of business.

Beginning May 20, the agency will accept 30 days of public comments on rules that govern how financially strong a company must be to guarantee its own environmental costs rather than having to purchase cleanup insurance from a third party. Existing rules have failed to protect taxpayers in the wake of multiple major coal companies declaring bankruptcy over the past year.

Dingell wrote a letter to oversight panel chairman Rep. Louie Gohmert (R-Texas) in June 2015 urging an investigation of coal self-bonding’s implications for taxpayers. That request was ignored.

Led by Reps. Grijalva, Dingell, and Cartwright, Natural Resources Committee Democrats are currently gathering signatures on a congressional letter to OSMRE detailing steps the agency can take to reduce taxpayer exposure. The letter will be released in the coming days.

In the last nine months, four coal companies worth more than $1 billion each have filed for bankruptcy. The list includes Peabody Energy, the country’s top coal producer, which declared bankruptcy April 13. The company had $1.47 billion in self-bonding obligations in Wyoming, Illinois, Indiana, Colorado and New Mexico.

Arch Coal, Inc. had $485 million in self-bonds in Wyoming when it declared bankruptcy in January; the State of Wyoming settled for $92 million in coverage. Alpha Natural Resources had $411 million in self-bonds in Wyoming when it declared bankruptcy in August 2015; Wyoming settled for $61 million. The company had more than $244 million in self-bond obligations in West Virginia, which settled for $39 million.

“Self-bonding rules are now little more than a taxpayer subsidy for failing coal companies, and we can’t wait much longer for a thorough rewrite,” Grijalva said today. “We keep hearing from Republicans about opposing bailouts. What do you call it when taxpayers are on the hook for hundreds of millions of dollars in cleanup costs?”

When the low cost of natural gas started to weaken coal companies’ ability to compete in the energy sector, many coal companies gambled on the strength of the Chinese coal market. The failure of those gambles, Grijalva said, should not obligate states or American taxpayers to pick up the bill.

“The multiple bankruptcies over the past year have shown time and again that coal companies with weak balance sheets, no matter how large they are, should not be allowed to self-bond,” Rep. Dingell said. “Today’s decision is a step in the right direction. Taxpayers should not be left on the hook for billions in cleanup costs when big coal companies go bust.”

“In my home state of Pennsylvania we deal with the environmental legacy of the coal industry every day. When companies are not held strictly accountable for the impact of their mines, the public bears the burden of cleaning up the mess,” Rep. Cartwright said. “We need to ensure that mining companies must put up the money necessary to fulfill their obligations, and with so many going belly-up, self-bonding should not be an option.”

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