Today in New West news: the issue of mine reclamation in the West, federal lawmakers introduce Gold King bill, and inContract Inc. to be bought by Nice Systems.
This year, several titans in the energy industry have fallen from grace, as it were, with giants such as Arch Coal and Alpha Natural Resources and Peabody Energy all declaring bankruptcy. And while in the short term the main worry is job security, there’s a larger issue looming, according to the Denver Post: who will pay for self-bonding. Indeed, some analysts are certain the costs will be passed onto taxpayers. From the Post:
It’s sort of a situation where nobody, really, is going to end up looking good,” said James Stevenson, director of North American coal for analyst firm IHS. “The states have, I think, a significant risk — the federal government does as well.”
This reclamation crisis looms because of a practice called self-bonding, which allows coal companies to promise to cover the cost eventually of cleaning up abandoned mines without first setting aside the necessary money.
Because of self-bonding, billions of dollars in legally required reclamation funding exist only as IOUs, without dedicated assets or bonds backed by third-party investors.
Nationwide, self-bonding in the coal-mining industry tops $3.3 billion.
Many American utilities will need coal to generate power for decades to come, but low prices for natural gas and increasingly cheaper renewable energy have driven down coal’s share of the nation’s electricity portfolio from half to about a third in the past decade.
Coal’s prospects are so grim that major lenders no longer plan to finance new coal mines or coal-fired power plants.
Concern has also bubbled up in the mind of the U.S.’s top mining regulator, who’s leery of companies passing the buck (as it were). According to the Casper Star Tribune, U.S. Office of Surface Mining Reclamation and Enforcement director Joe Pizarchick earlier this week voiced “grave concerns” that the big coal companies were colluding to avoid cleanup:
“People are concerned whether disturbed coal mines will be reclaimed by the bankrupt companies, whether the bankrupt companies will use bankruptcy court proceedings to abandon their legal obligations to restore the land and water, whether the cost to restore the land and water will be shifted to taxpayers, and whether the existing regulations are adequate to protect people, society and the environment from the adverse effects of coal mining, as was envisioned by Congress when it enacted (the Surface Mining and Reclamation Act) nearly 40 years ago,” Pizarchik said.
Self-bonding has emerged as a national issue in recent months, as mining firms filed for Chapter 11 and environmentalists voiced concerns about companies’ ability to pay for cleanup.
Yet it is arguably most pressing in Wyoming, the country’s top coal mining state, where three bankrupt mining firms have a combined $1.6 billion in self-bonds.
Companies have sought to assuage worries about their ability to pay.
Alpha Natural Resources, Arch and Peabody have all continued to operate as they attempt to restructure their debts. Reclamation, they say, has continued at each of their properties.
Under federal law, states have the primary authority for administering reclamation programs, but ultimate oversight authority rests with OSMRE.
Over in Colorado, we’ve been following developments in the aftermath of the Gold King Mine spill last August, when EPA crews accidentally released tons of waste material into the Animas River. Many legislators (in states such as Colorado, Utah, Arizona, and elsewhere) have taken issue with the EPA’s actions, saying they are not paying due attention. Now, according to the Durango Herald, several members of the U.S. Senate (Senator Cory Gardner [R-CO] and Senator Orrin Hatch [R-UT]) have introduced a bill that will mandate the EPA pay for all costs related to the spill:
“The EPA is wholly accountable and therefore should be held to the same standard as private companies, and the Gold King ACT makes sure of it,” Gardner said in a statement. “I’ll continue to fight to ensure all of those affected by the Animas River spill are made whole, and encourage my colleagues to join Senator Hatch and me in rejecting Washington’s double standard and holding the EPA fully liable.”
Sen. Michael Bennet, D-Colo., introduced a similar bill in September last year. The “Gold King Mine Spill Recovery Act” would require the EPA to compensate those affected by the spill, and to work with local communities to fund and implement long-term water-quality monitoring and to assess the state of other abandoned mines.
According to Philip Clelland, a spokesman for Bennet, the senator also spoke with EPA Administrator Gina McCarthy last week to urge her to fully reimburse Colorado counties, cities and tribes.
Other Colorado lawmakers support holding the EPA accountable, including Rep. Scott Tipton, R-Cortez. Josh Green, a spokesman for Tipton, said if this legislation proves effective at helping affected communities, the representative will likely introduce “something substantially similar in the near future.”
So far, the EPA has allocated more than $2 million to support states’ and tribes’ water-quality monitoring programs, including in Colorado. It also has given $270,578 to La Plata County for various expenses related to the spill, including $63,406 announced this week. The agency is reviewing additional expenses incurred by the county, and expects to reimburse additional allowable costs under a cooperative agreement with the Colorado Department of Public Health and Environment, according to an agency spokesperson.
Despite this, almost $5 million from more than 60 federal claims related to the spill have gone uncompensated by the EPA, according to a statement from Gardner. The proposed legislation would require the EPA to fully reimburse these claims out of its budget. It also would speed the process for reimbursing all emergency response costs from tribes, counties and local governments.
The bill includes a timeline for repaying claims related to the spill. Previously filed claims would need to be compensated within 60 days, and new claims would need to be filed within 90 days, according to the text of the bill.
The EPA had previously announced they would not pay claims for work done after October 31.
Over in Utah, Midvale-based inContact Inc., a “cloud contact center software” company, announced earlier this week it had been bought by Israeli tech giant Nice Systems to the tune of $940 million. According to Utah Business, under the deal, inContact stockholders will receive $14 per share in cash. The deal was unanimously approved by inContact’s Board of Directors and will be finalized later this year, pending stockholder approval. From Utah Business:
“We strongly believe that this transaction best positions the Company to execute on our vision of helping our customers deliver exceptional customer experiences, while rewarding our existing stockholders for the work we have achieved to date,” said Paul Jarman, CEO of inContact. “We are excited to work with our new business partners at NICE and enter our next chapter of industry leadership.”
According to Fortune Magazine, Nice is buying inContact in order to expand both their portfolio and their reach.