Appalachian taxpayers could get stuck with $1B cleanup costs for bankrupt coal companies

Partially reclaimed West Virginia mine (Ohio Valley Environmental Coalition photo)

Taxpayers in Appalachia could end up footing a $1 billion bill to clean up mountains and rivers polluted by bankrupt coal companies, Michael Corkery reports for The New York Times, in the latest story on the topic.

"Regulators worry that coal companies will use the bankruptcy courts to pay off their debts to banks and hedge funds, while leaving behind some of their environmental cleanup obligations. The industry asserts that its cleanup plans—which include turning defunct mines back into countryside—are comprehensive and well funded. But some officials say those plans could prove unrealistic and falter as demand for coal remains weak."

"West Virginia faces perhaps the greatest fallout from the flood of coal bankruptcies that have hit the courts in the last year because many of its mines are scheduled to close and will require extensive cleanup," Corkery writes. The state hired a New York bankruptcy lawyer to represent its Department of Environmental Protection in a case with Alpha Natural Resources. Kevin W. Barrett, who was named a special assistant attorney general for West Virginia and is taking the lead on the Alpha case, told Corkery, “The goal is to make sure the coal companies clean up the mess when they leave."

Alpha, which insists it will make good on all its environmental obligations, has a plan on the table that "would commit at least $209 million for reclamations and water treatment in five states: Illinois, Kentucky, Tennessee, Virginia and West Virginia," Corkery writes. Barrett said he "worries that the cash is insufficient and that any additional contributions depend on future coal sales, which show little sign of recovery." Barrett told Corkery, “There are a lot of questions whether that will even cover the costs."

Several coal companies have emerged from bankruptcy in recent months and continued to operate, but "state officials have expressed concerns that those companies could soon end up back in bankruptcy if the coal market does not improve," Corkery writes. "If that happens, they say, the companies will probably have to liquidate, leaving little money to fund reclamations and clean up polluted water. That concern is behind the urgent pleadings of environmentalists and even insurers that the coal companies be required to set aside more cash for environmental issues before they are allowed to emerge from bankruptcy." (Read more)