(Opinion) — The federal strip mine bill enacted in 1977, despite decades of opposition, imposes a hefty fee on coal mining for the purpose of reclaiming orphaned mines. Hundreds of companies had walked away from mines in West Virginia, Kentucky, Illinois and other states, leaving polluted water and ruined land. The Abandoned Mined Land fund was established to provide state and federal agencies with money to clean up these messes.
The sheer bulk of mining coal in Wyoming since 1977 has generated hundreds of millions of dollars that have not generally been needed for coal mine reclamation in Wyoming. AML money was initially used in Wyoming to extinguish underground coal fires, plug uranium test holes and the like, then was diverted to purposes having nothing to do with reclamation.
Congress has recently acted to send a big pile of this AML money to Wyoming. Now we have to think about actually using this money for the purpose for which it is collected.
Environmental groups and others opposed to burning fossil fuels have caused some unanticipated consequences through their relentless pressure on the coal industry. EPA’s multi-faceted attempts to impose carbon emission controls on coal power plants has effectively created enough uncertainty to completely eliminate the ability of utilities to borrow large sums to build new coal plants. As old plants are being retired, the capacity needed to meet demands is being replaced with natural gas and, to a limited extent, wind and solar power, in large part because no one can finance new coal plants. Eroded demand has sharply driven down the stock prices of coal-mining companies. As the values of the companies plummet, their ability to use their stock value as a guarantor of financial ability to reclaim thousands of acres of mined Wyoming land has collapsed.
Wyoming’s Department of Environmental Quality reacted to Alpha Natural Resource’s declining stock values by canceling the company’s self-bonding status and demanding $400 million worth of bonding. Of course Alpha cannot possibly meet this demand. The same is likely true of several other coal-mining corporations. What insurance company is going to sell $400 million worth of bonds and assume the risk of expensive reclamation? Alpha filed for Chapter 11 bankruptcy protection, surely to be followed by others. DEQ’s demands for money for reclamation are unsecured debts. Unsecured debts are not always treated favorably in bankruptcy courts. DEQ will need shrewd negotiators to attempt to obtain some assurance that the companies will be able to reclaim thousands of acres of strip-mined land after filing for bankruptcy.
Meanwhile Wyoming’s governor and Legislature are under pressure to divert AML money to local governments and the University of Wyoming, as has been frequently done in the past. Maybe they need to save this money for reclamation instead, so we don’t end up looking like parts of West Virginia.
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