A leading federal regulator said yesterday that states should force coal companies to set aside collateral to pay for future mine cleanups and protect taxpayers as the industry braces for further declines, Reuters reported. Three of the largest U.S. coal producers, Peabody Energy, Arch Coal and Alpha Natural Resources, have filed for bankruptcy in the past year in an industry shaken by cheap natural gas and falling demand from China. With coal production outstripping demand, the market is not likely to recover until at least 2021, Joe Pizarchik, who heads the Office of Surface Mining and Reclamation Enforcement, told Reuters. Pizarchik's forecast is based on recent data from the U.S. Energy Information Administration that shows continued declines in capacity for coal-fired power plants for the next five years. This has raised concerns because the three bankrupt coal producers have not set aside cash to pay for roughly $2 billion in projected mine cleanups. Instead, they used a federal subsidy known as "self-bonding," which essentially exempts healthy companies from posting bonds or other securities to cover the cost of returning mined land to its natural setting. "We're moving as quickly as we can to help the states do their best to protect the taxpayers," Pizarchik said. "We want to give them the tools to ensure that mined land is reclaimed."
