An environmental advocacy group released a report Jan. 9 arguing that the coal industry may crash and leave the public with the financial burden of the environmental cleanup of developed mining sites.
Federal law requires that companies put bonds into place to ensure there’s money to cleanup land, restore water quality and plant permanent vegetation when companies are done operating on properties.
In its 41-page report, the Western Organization of Resource Councils (WORC) examines the possibility of reclamation of coal mines falling to state and federal regulators or, in some states, taxpayers if the corporations don’t put money aside with surety companies.
Report author Dan Cohn with WORC says historically taxpayers have not had to pay for such a thing in Montana.
“One of the things we’re trying to point out in this report is past experience won’t necessarily be a good guide for the future,” Cohn said.
The report assumes a decline of the coal industry in light of recent major bankruptcies and state regulations favoring renewable energy over coal-fired power.
According to federal law, the state, federal government or both may seize funds and cover reclamation themselves if a company goes bankrupt and fails to sell the land to another buyer. If there aren’t enough funds available for cleanup, a surety company pays the sum to the regulator.
But one of the major points of concern for WORC, according to its report, is self-bonding. That’s a form of "I owe you" where a company in good financial standing foregoes surety bonding and instead promises to pay the cost of reclamation.
Joe Micheletti is chief operating officer of the Westmoreland Mine Company, which runs three mines in Montana. He points out that while self-bonding is allowed in some states, like Wyoming and North Dakota, it’s not permitted in Montana.
“The guidelines and rules and policies of the Montana DEQ are strict, they’re as strict as there are in the country, in my mind, and our operating permits require us to stay complaint and stay compliant with contemporaneous reclamation,” Micheletti said.
In the case of self-bonding, reclamation costs might fall to taxpayers or land owners if a company goes bankrupt and no funds are available.
To avoid this, the WORC report advises regulators to get rid of self-bonding entirely. The report also suggests ways of making sure that funding is reliably sourced and companies don’t sit on unreclaimed land, but instead reclaim it while operations are ongoing.