Cantwell-Requested GAO Audit Finds That Coal Mining Gets a Deal Unfair to Taxpayers

New Report Released Today Finds That Only Coal Companies Have the Ability to Self-Bond, Which Harms Mining Communities and Taxpayers Nationwide

January 17, 2017

Washington, D.C. – Today, Ranking Member of the Senate Energy and Natural Resources Committee Maria Cantwell (D-Wash.) confirmed that the coal mining industry in the United States is the only onshore industry with the ability to demonstrate financial assurance through self-bonds, which harms taxpayers and communities affected by mining. The findings are part of a new report released today by the U.S. Government Accountability Office (GAO) that was requested by Sen. Cantwell, Sen. Durbin and Reps. Raúl Grijalva, Matt Cartwright, Debbie Dingell and Alan Lowenthal.

GAO has now confirmed that coal companies are getting a sweet deal at the expense of communities and taxpayers,” Sen. Cantwell said. “It’s time the rules for coal caught up to the rules for other forms of mining and energy production.”

Subsidizing Big Coal by letting them promise to pay to clean up their messes later has never been sound policy. As cheap natural gas drives one coal company out of business after another, these future promises to pay are now worth less than ever,” said House Natural Resources Committee Ranking Member Raúl M. Grijalva (D-Ariz).

Federal law establishes requirements for companies to reclaim land disturbed by development that differ based on the type of natural resource involved. The GAO audit compared on-shore financial assurance requirements for reclamation across energy and natural resource sectors, including surface coal mining, hardrock mining on federal lands, onshore oil and gas on federal lands, and wind and solar development on federal lands.

GAO confirmed that coal mining alone gets a sweet deal: authorization to demonstrate financial assurance through self-bonds. Specifically, GAO found that “surface coal mining is the only activity we reviewed for which federal requirements allow real property—collateral in the form of real estate—or self-bonding. Self-bonding used to be allowed for hardrock mining, but BLM [the Bureau of Land Management] adopted regulations in 2001 prohibiting the practice for new operations, in part because of concerns that self-bonds were less secure than other forms of financial assurances.”

Sen. Cantwell has advocated for more stringent reclamation bond requirements that protect taxpayers and communities from the risk of company bankruptcies, including a prohibition on self-bonding. She introduced a bill last year, the Coal Cleanup Taxpayer Protection Act, to amend the Surface Mining Control and Reclamation Act and better protect taxpayers. Since 2015, billions of dollars of reclamation self-bonds have been jeopardized by coal company bankruptcies, subjecting taxpayers to the risk of picking up the tab instead.

This issue will likely be raised at today’s hearing for the president-elect’s nominee for Secretary of the Interior. The hearing begins at 2:15PM EST/11:15AM PST.