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Energy & Environment

Texas Says No Worries As Feds Warn States About Dangers Of Bankrupt Coal Mines

Texas is pushing back against proposals to make big coal companies insure that they’ll have the money to repair land damaged by strip mining.


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Strip mining at Big Brown Coal Mine in Freestone County, Texas
Dave Fehling
Strip mining at Big Brown Coal Mine in Freestone County, Texas

Not a hundred miles north of Houston begins a stretch of lignite coal, lying underground. For years, huge power shovels stripped off the soil to get to it. The coal was then burned in nearby power plants.

There are 19 coal mine locations in east Texas. About half are owned by Luminant Mining based in Dallas. Luminant was on the hook to repair the damaged land, to restore it, at a cost of some $1 billion. But there was a problem: Luminant's parent company, Energy Future Holdings, went bankrupt.

"The states know if the companies liquidate, go out of business, the states are going to take on that huge financial burden," says Peter Morgan, a lawyer in Denver with the Sierra Club.

Morgan says in some states, that's exactly what's happening: coal mines going bankrupt leaving un-answered who will pay to restore damaged land.

We highlighted this issue in Texas back in 2013. State regulators and environmentalists feared Luminant wouldn't have the money. It was what's called self-bonded. In other words, it was not required to buy insurance to cover the billion dollar liability.

Luminant's billboards on reclaimed land at the Big Brown Mine
Dave Fehling
Luminant’s billboards on reclaimed land at the Big Brown Mine

But then, just as the parent company declared bankruptcy, it agreed to buy the insurance. So bankruptcy or not, the money to repair the land should be there.

However, federal mining regulators have their doubts about self-bonding and are now considering whether to outlaw it.

The State of Texas disagrees. In a letter last month to the Office of Surface Mining Reclamation and Enforcement, Texas said it's confident that self-bonding provides quote "adequate protection." The letter from Railroad Commission of Texas said it appeared the proposal was being pushed by environmentalists as quote, "part of their broader...efforts to end coal mining in the United States."