Australian news, and some related international items

Taxpayer left with dirty legacy as coal companies go bankrupt

text-relevantFlag-USAAfter Bankruptcies, Coal’s Dirty Legacy Lives On, NYT By TOM SANZILLO and DAVID SCHLISSEL APRIL 14, 2016  THE bankruptcy filing on Wednesday by Peabody Energy, the world’s largest private- sector producer of coal, is the latest in a series of major coal company collapses that threaten to leave behind a costly legacy that will haunt taxpayers and consumers for years.

The abandonment of hundreds of mines over the years led Congress in 1977 to pass a law that requires coal companies to clean up after mining. Left untreated, these sites are more than eyesores: They create long-lingering problems including polluted drinking water.

And the problem is likely to become more pronounced in the wake of these bankruptcies. Mining companies are supposed to buy insurance to cover the cost of cleanups. But Congress has allowed some of the more financially secure coal producers to “self-bond,” promising to pay for cleanups themselves.

This arrangement made sense when the industry was healthy and had deeper pockets. But now taxpayers are at risk of having to foot the bill as mining companies either file for bankruptcy or redirect their dwindling dollars elsewhere to stay afloat — including paying obscenely generous compensation packages to executives. A recent congressional estimate puts outstanding cleanup liabilities nationally at $3.6 billion.

Perhaps the most glaring instance of self-bonding gone bad is Peabody Energy. Leading up to its bankruptcy, Peabody had been frantically trying to preserve its $1.47 billion in self-bonding agreements in states where they had been called into question by regulators.Two other major coal companies, Alpha Natural Resources and Arch Coal, recently filed for bankruptcy, leaving hundreds of millions in reclamation guarantees in limbo. A deal between Arch Coal and regulators in Wyoming suggests taxpayers will get stuck with the bulk of the cleanup costs. The company agreed toearmark at most $75 million to cover self-bonded reclamation liabilities of more than $450 million………

The recent bankruptcies of the nation’s leading coal producers are the latest benchmark in the steady decline of the coal industry. The industry’s problems are also hurting consumers, who are being hit by unnecessarily high electric rates approved by regulators to keep open coal-fired power plants that are no longer competitive with cheaper natural gas and renewables. …… electricity companies blinded by history and tradition are sticking with coal and neglecting more sensible and affordable strategies that include natural gas, renewable energy and energy efficiency……

April 15, 2016 - Posted by | Uncategorized

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