U.S. coal regulator boosts campaign to fix 'outdated' cleanup rules

Reuters News
|
Posted: Aug 16, 2016 4:10 PM

By Tracy Rucinski

CHICAGO (Reuters) - A leading U.S. coal regulator announced plans on Tuesday to toughen what it called "out-of-date" rules for guaranteeing mine cleanups.

The Office of Surface Mining and Reclamation Enforcement said it would start working with U.S. state regulators to modify rules on self-bonding, a decades-old program that allowed healthy coal companies to post promissory notes instead of collateral to guarantee returning disturbed land to its natural setting.

"There is no money behind that promise to make sure the land is restored," Joe Pizarchik, who heads the Office of Surface Mining and Reclamation Enforcement, said in a video posted by his agency on YouTube. (https://www.youtube.com/watch?v=_87KiFJQERc&feature=youtu.be)

Critics have said current self-bonding rules are harmful because they leave taxpayers exposed to billions of dollars of environmental liabilities if a coal producer fails to comply with its legal obligation to clean up pits.

Three of the four largest U.S. coal companies, including global leader Peabody Energy Corp, have filed for bankruptcy in the past year with more than $2 billion in self-bonds for future mine cleanups across several states.

Replacing at least some self-bonds has been a key element of bankrupt coal companies' restructuring plans.

Among the changes, Pizarchik proposed modifying self-bonding eligibility standards, diversifying financial assurance options for mine cleanups and ensuring an independent third-party review of self-bonded entities' current and future financial health.

It was not clear how soon any new rules might take effect.

As coal is replaced by cheaper natural gas and renewable energy, Pizarchik said the limitations of current self-bonding rules have been exposed, creating the need for new regulations "to help states better protect people and the environment."

The announcement follows a petition by WildEarth Guardians, which set off a period for public comment about self-bonding. More than 117,000 comments along with recent U.S. coal market forecasts helped persuade regulators to tighten self-bonding rules, Pizarchik's agency said in a statement.

Last week, Pizarchik issued a policy advisory with new self-bonding guidance and said regulators in states with self-bonds should immediately assess whether companies still qualify for the program.

"They're realizing they need to act quickly to fix fundamental problems with self-bonding," Jeremy Nichols of WildEarth Guardians said of the federal regulator's latest steps.

Nineteen states allow self-bonds, while five prohibit them. As of July, there were self-bonds worth $3.6 billion across about 10 U.S. states.

(Editing by Matthew Lewis)