Who Pays For Clean Up When Coal Goes Bankrupt?

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More than one million acres of land across the U.S. has been dug up and built on for coal mining operations. As mining progresses, companies are required to restore the land to what it once was through a multi-step process that includes filing up the pits back up with dirt and replanting native grasses.

Grass grows over reclaimed mine land in Wyoming's Powder River Basin. But who will pay for cleaning up mines when coal companies go bankrupt? Photo by Leigh Paterson/Inside Energy

Grass grows over reclaimed mine land in Wyoming’s Powder River Basin. But who will pay for cleaning up mines when coal companies go bankrupt? Photo by Leigh Paterson/Inside Energy

That process is called reclamation, and it’s expensive. The Surface Mining Control and Reclamation Act, passed in 1977, was the first-ever federal law to regulate coal mine clean up. One of SMCRA’s provisions┬árequires coal mining companies to post financial guarantees to ensure that reclamation will be paid for. But some states have allowed companies to “self-bond.” Self-bonding allows coal producers to guarantee reclamation with their own financial strength instead of with cash. Coal giants like Peabody Energy, Alpha Natural Resources and Arch Coal were all self-bonded in Wyoming and other states.

But all three of those companies declared bankruptcy in the last year. Which raises the question: when coal companies go broke, who pays to clean up the mines? ┬áInside Energy’s Leigh Paterson explains.