Lawmakers promise scrutiny of coal cleanup insurance requirement loopholeReprints
(Reuters) — Lawmakers will examine whether a program that allows coal companies to forgo mine cleanup insurance could leave taxpayers with billion dollar costs, leading members of the U.S. House Committee on Natural Resources said on Wednesday.
The coal sector is responsible for cleaning up exhausted mines and they typically pay private insurers to finish that work if a mining company goes bankrupt.
But a federal program called “self bonding” has allowed the largest miners to leave a share of future cleanup uninsured and lawmakers are concerned that’s where taxpayers could take a hit.
“We must ensure taxpayer dollars are not needlessly put at risk to cover cleanup costs,” wrote Rep. Debbie Dingell, the leading Democrat on the committee’s oversight panel.
Rep. Louie Gohmert, the top Republican on the panel, said he supported such a review.
“Taxpayers should not be on the hook to cover any energy company’s reclamation and cleanup costs, whether that energy be wind or coal, solar or gas,” Rep. Gohmert, of Texas, said in a statement.
The country’s four largest coal companies — Peabody Energy , Alpha Natural Resources, Arch Coal and Cloud Peak Energy — together have about $2.7 billion in clean-up costs covered by self bonding, according to securities filings and regulators.
Last week, Fitch Ratings Inc. warned that tougher rules for self-bonding could push leading coal companies closer to bankruptcy.
“Tighter self-bonding requirements for distressed coal entities would reduce liquidity and could hasten restructuring,” Fitch Ratings wrote.
Lawmaker concerns could lead to a congressional hearing and put more pressure on Interior Department officials already examining whether coal companies are financially fit enough to self-bond.
The shares of many major coal companies have fallen by more than 90% in the last four years, and industry analysts warn that near-term bankruptcies are a real danger.
Rep. Dingell said she was also concerned that Peabody Energy and Arch Coal are wrongly using affiliate companies to win the right to self bond.
Representatives of the companies could not immediately be reached for comment.