Yesterday, AP reported that coal-mining giant Peabody Energy, unable to meet interest payments on its debt, announced it may have to file for Chapter 11. This would make it the fourth coal company to declare bankruptcy in the last year, following Arch, Alpha Natural Resources, and Patriot.
This is good news. It’s also very, very scary news.
Most here are aware of the economic blow mine closings and slowdowns are having in the coal belt. The industry is rapidly shrinking and new jobs are not being created at a sufficient pace to maintain employment.
But there’s an even more frightening aspect to the death of Big Coal: its corpse.
During headier days, a federal program allowed coal companies to guarantee site remediation through “self-bonding,” pledging their own assets against cleanup costs. Now, however, with the biggest companies going into receivership, those assets are unlikely to be available.
What’s more, even before bankruptcy, Peabody has been playing a too-clever shell game, placing its assets in subsidiaries while leaving the parent company holding the debt. Mines in Indiana and Illinois are run through Peabody’s sub Peabody Investment Corporation, which scoops up the coal and the money while the parent company is responsible for remediation.
This is basically a Superfund situation waiting to happen. And you can be sure it will, with companies like Peabody taking every advantage of this out-of-date regulatory feature, assuring the privatization of profit and the socialization of cost.
While campaigns address the personal side of the coal collapse, this wide-open loophole needs to be closed post haste.
Some detail on self-bonding and its implications at Midwest Energy News.