Collapsing Coal in Colorado

Mine MapOn April 13, 2016, Peabody Energy, the largest coal producer in the United States, filed for Chapter 11 bankruptcy.3  Peabody will be the fifth coal mining company to file for bankruptcy in the last year.  Peabody owns and operates the Twentymile (Foidel Creek) mine in Routt County, the second largest coal mine in Colorado.  Arch Coal filed in for bankruptcy in January, the owner of the West Elk mine, the largest in the state.  Although the Colorado Mining Association places the blame squarely on the shoulders of the current Administration, the writing has been on the wall for some time.5  Since 2004, coal production in Colorado has dropped over 50 percent, costing hundreds of jobs in rural western Colorado.4  The increasing availability of natural gas, which burns cleaner, increasing push for energy efficiency keeping demand flat domestically, and falling global demands, especially from China have combined to push coal increasingly out of the energy market.

The coal mines are still operating but have laid off workers across the state in an attempt to curtail costs as they restructure under the bankruptcy filing.  There is also a very real concern that these bankruptcy filings will impact these companies’ commitment to reclamation efforts after their eventual and inevitable closings.  Peabody switched from self-bonding in Colorado to surety bonds which means they are guaranteed by a third party just days before announcing their bankruptcy.6  However our neighbors to the north and south, Wyoming and New Mexico have not been so lucky.

To explain this important difference, a quick history lesson is in order.  In 1977, the Surface Mining Control and Reclamation Act (SMCRA) was passed to insure mining companies took responsibility for the reclamation of the lands they used for their operations.1  Before SMCRA, over a million acres of land was left decimated by abandoned mines in the US.1  However, States eager to appease the mining companies who offered great tax benefits by existing, discovered they could allow the companies to avoid putting up collateral or paying a surety company to guarantee the bond by allowing the companies to self-bond.  “More than $3 billion in coal-mine reclamation liability is self-bonded today, two-thirds of it in Wyoming, where 40 percent of U.S. coal is mined.”1  So Peabody decided to pay the surety bond fees in Colorado to guarantee the $27 million of mine-reclamation to appease the state, but they are still self-bonded in Wyoming and New Mexico, to the tune of $728 and $181 million respectively.6  Colorado still allows Tri-State Generation over $100 million of self-bonded reclamation money for its coal mines.6

Social Workers in pursuit of social justice need to speak out against corporate greed and collusion of the government with big business to the detriment of the environment.  We also need to advocate for relief to rural Coloradans and the communities that are most impacted by the decrease in coal production.  When these companies declare bankruptcy, the States that have allowed self-bonding get in line behind the creditors that always come first to attempt to recoup some of that promised money.  The chances of these States getting their money is slim to none, and slim just left town on the last coal train out of Western Colorado.

 

References:

1 Bennet, M.  (March-April 2016).  Here’s the Ugly Mess Coal’s Decline Could Leave Behind.  Audubon.  Retrieved from https://www.audubon.org/magazine/march-april-2016/heres-ugly-mess-coals-decline-could-leave

2 Colorado Mining Association (Cartographer). (2014).  Mine Map.  Retrieved from https://www.coloradomining.org/mining-in-colorado/

3 Dewan, B. (2016, April 13). The World’s Largest Private Coal Company Just Filed For Bankruptcy.  ThinkProgress.  Retrieved from http://thinkprogress.org/climate/2016/04/13/3768908/worlds-largest-coal-company-bankrupt/

4 Finley, B. (2016, May 14).  Collapse of Colorado coal industry leaves mining towns unsure what’s next.  The Denver Post.  Retrieved from http://www.denverpost.com/2016/05/14/collapse-of-colorado-coal-industry-leaves-mining-towns-unsure-whats-next/

5 Sanderson, S. (2016, April 13).  CMA Statement on the Chapter 11 Filing by Peabody Energy.  Colorado Mining Association.  Retrieved from https://www.coloradomining.org/2016/04/cma-statement-on-the-chapter-11-filing-by-peabody-energy/

6 Webb, D. (2016, April 18).  Peabody switched from self-bonding for state mine cleanups before bankruptcy filing.  The Daily Sentinel.  Retrieved from http://www.gjsentinel.com/news/articles/peabody-switched-from-selfbonding-for-state-mine-c

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