Why Coal Companies Love Bankruptcy

Why Coal Companies Love Bankruptcy

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Ever since I was a young kid, my grandpa tried to instill it in me that the coal company is not your friend, that they're going to exploit you. They're going to squeeze every bit of value out of you that they can, and they're going to leave you broken. All you need to do is look at this bottle of water that I brought with me today.

Congressman Carter, I talked about orange water. None of us would drink this. They told the people, "Don't let your kids play in it and don't let your animals drink from it."

From Pennsylvania and Ohio all the way down to Alabama, there are roughly 600,000 acres of mines left to be reclaimed. And as they sit, they create more pollution and have more erosion issues and other problems because they're not being maintained. The death toll in Kentucky continues to rise following what the governor called "The worst flooding disaster he has ever seen." There's a federal law that, if you mine coal, you have to clean up the land when you're done.

And a lot of companies have found ways to avoid doing that. Bankruptcy seems to provide coal companies a way to shed a lot of liability. Hey, look, there's a stigma associated with filing for Chapter 11, 'cause people confuse it with you're going out of business. We're not going out of business, we're going to restructure. This is a story about how big coal companies avoid their responsibility to clean up their old mines.

My name is Junior Walk. I'm 32 years old. I work for Coal River Mountain Watch. Essentially what I do is go out and document coal mining operations, usually with video by drone. Trying to find things that the coal companies are doing that goes against environmental regulations, like making roads in places they're not supposed to, blasting in places they're not supposed to, timbering where they're not supposed to, and get them in trouble on that. So, welcome, this is the Coal River Mountain Watch office.

When I was a kid, it was like a pizza place, but we've been here since like 2014. Our main mission is to be a thorn in the side of the coal industry. We are going to keep on them until they're out of here.

There was a bridge owned by a coal company that had collapsed into the river, and I called it in and they made them clean it up. This is the Brushy Fork Impoundment. It holds back 7.8 billion gallons of coal slurry.

It's a lake of toxic waste. The Appalachian Mountains are beautiful. I mean, being up in the mountains, it's bright, bright green trees and almost vertical mountains rising away from the road. At the same time, the presence of coal there is almost overwhelming. I mean, it's really everywhere. There are coal conveyors, basically big pipes with conveyor belts that run over the road.

So you're just driving along, and then there's just a lot of big tubes running over the road. There's coal trucks that are really, really loud and really big that go by, it seems like almost like once a minute. Some of the small towns we stopped in, there was coal littering the side of the road because so many coal trucks go by that coal shakes off the top of them, and there was just little pieces of coal along the road. A lot of people we talked to did feel like, we live in such a beautiful place and it's really been severely damaged by the coal companies. People talked about growing up with family members gathering ginseng or gathering firewood or hunting in the woods, and that, now, some of those areas are just gray moonscapes where they can't do any of those things. This is the Twilight complex, which is Lexington Coal Company operation.

It's a massive mountaintop removal site that is a chunk of Raleigh County and Boone County. Initially, it was a Massey Energy operation, and then it sold to Alpha. Then I suppose Alpha has offloaded it onto some company known as Lexington because they don't want to bother with the reclamation responsibilities up there.

This is the site that Lexington is supposed to be, you know, reclaiming, and they're not. There's no equipment out on that site. No work being done whatsoever. I mean, it essentially hasn't been touched since Alpha had it.

I first got interested in this story when I was a bankruptcy reporter. Coal companies went through a big string of bankruptcies around 2015, 2016, and during that time, they offloaded or shed a lot of labor obligations, promises that they'd made to pay workers. And those were mostly picked up by the federal government. So I kind of had it in my head that, you know, coal companies and their obligations was an interesting area.

Bankruptcy seems to provide coal companies a way to shed a lot of liability and come out the other side as a profitable company that still holds mines. When coal companies go bankrupt, any other legal actions against them are often stopped. So if we find a water pollution issue and it's with a coal company that is in bankruptcy, there's often little we can do for citizen enforcement of water pollution issues against a coal company that's in bankruptcy. We became focused on a company called Alpha Met, Alpha Metallurgical Resources, because it's a really big company, it's one of the biggest coal companies in the U.S., because it's shed a really large number of permits.

And a mine permit is what a company has that allows them to mine coal on a specific piece of land. And attached to the permit is also the responsibility to clean up the land. The story with Alpha is they were doing really well for a while. They were buying other coal companies, they were mining a lot of coal, they were making a lot of money.

But around 2015, low natural gas prices undercut coal, and that helped push companies like Alpha and other coal companies into bankruptcy. Pretty soon after the bankruptcy, Alpha passed on its used up mines, or mines that had less coal in them, to smaller companies. And along with those mines went the obligation to clean up the land.

So, over the past decade or so, really since about 2015 when several companies, large companies went bankrupt, we've seen a phenomenon of companies shedding their liabilities. Essentially, they will sell their good mines that still have coal to mine to companies that want those mines, and then they will sell their other mines that often only need reclamation and may have a lot of liability to other coal companies who agree to take them on, usually because the original companies are paying them to do so. And we've seen several rounds of that happen. It's kind of like a game of hot potato where we're just waiting to see what coal company is going to be left with the mine when they eventually run out of money and can no longer find another coal company to take them on. Alpha Natural Resources announced the transfer of some mostly idled mining properties in West Virginia, Kentucky, and Tennessee to a company called Lexington Coal Company. Almost all the big coal companies in the U.S.

have used a similar playbook. The big mining companies, like Alpha, transferred a lot of their permits to smaller companies, companies like Lexington, Blackjewel, Pristine. And then those smaller companies have often racked up a really large number of environmental violations. So when Alpha and Lexington announced the big transfer, they said that they could accelerate reclamation on a five-year timeline. Five years have passed and not a lot has been done. Out of about 230 permits, only 40 have been cleaned up.

All righty, here we go. So when I was a senior in high school, I went to work for Massey Coal Company, 'cause I realized that you kind of need money to go to college in this country, and I didn't have money and neither did my family. So I went to work with my dad at the Elk Run coal processing plant. I was just doing general maintenance. Some days it wasn't so bad, they just have me like cutting grass. But some days, I'd be waist deep in coal slurry with a high-powered pressure hose.

I felt like I was taking my life into my own hands every time I'd come to work. So I quit that job, and by the time I was 19, a friend of the family offered me a position as a security guard on a mountaintop removal site. But within the first week of me working up there, watching that machinery tear down that mountain for 12 hours a day made me feel like that money I was putting in my wallet was blood money, because it was. I mean, the things I went through when I was a kid of coal trucks rumbling by your house all hours of the night, coal trains, you know, dust, bad water, all that, I knew that the people who were living down below that mine site that I was working on were going through the same things. This is the underground coal mine near my parents' house in Eunice. You can just see coal pouring right off the belt line into the coal pile.

You can see an excavator loading up a coal truck. When I was a real young kid, we had well water at this place, and Massey Energy, at the time, started getting rid of their coal slurry by pumping it into an old abandoned underground coal mine on this same hillside that this new coal mine is now in. That ended up making its way through the groundwater, through the aquifer, and getting into our well. And our well water at that house was red for years and smelled absolutely disgusting.

Yeah, this crap over here pretty much ruined my childhood home, so that's great. In these underground deposits, West Virginia has coal enough to last the nation for generations. Coal really powered the U.S. Coal was used to forge weapons during the Revolutionary War. But for most of the first 200 years coal was mined in the U.S., there were no real regulations or laws that would make companies clean up the land after they were finished mining.

That changed in 1977 with the Surface Mining Control and Reclamation Act, SMCRA. I recommend a three-phase program at the federal level. One is a law that says industry cannot strip mine land unless it can restore it to its original utility and natural purpose. So the federal surface mining law spells out certain requirements about returning the land to its approximate original contour, so that means putting some of that excess dirt and rock back, kind of building the mountain back up. They would have to re-vegetate the site or add whatever infrastructure might be needed for post-mining land use.

So in a lot of cases, it would be replanting forests, but it could also be building infrastructure. They also have to address water problems. During mining, they control their water runoff with sediment ponds so that they're not letting polluted water leave the mines. But during reclamation, they are required to get that mine back to the state where it's no longer producing polluted water. Most companies would claim that they're doing good reclamation and they're doing it as quickly as they can. But from what we've seen on the ground, we see mines that sit unreclaimed for close to a decade.

So those mines aren't being reclaimed and they are not producing coal. They're just sitting idled. And as they sit, they create more pollution and have more erosion issues and other problems because they're not being maintained. Eastern Kentucky is the epicenter tonight of the nation's latest extreme weather disaster. The death toll in Kentucky continues to rise following what the governor called, quote, "the worst flooding disaster he has ever seen."

There are hundreds of unaccounted-for people, minimum. The flooding that we've seen in Central Appalachia in recent years as weather events get more extreme, that flooding has been exacerbated by the presence of these unreclaimed surface mines, because the mines that haven't been re-vegetated, they can't hold water like a natural forest can. One of the greatest sources of frustration is that, while there are laws on the books that actually require the coal companies to do remediation and to clean up some of the damage that this process does, those laws are rarely enforced. And there millions and millions of dollars in fines that have been levied against these coal companies that they haven't paid.

So the sad truth is that the cost of this damage is borne by the people who live in these areas. It was a really difficult story to report. Some of the challenges were people in the region.

People in West Virginia and Kentucky were often pretty reluctant to speak about what they'd been through or how their homes had been damaged. Coal provides many of the jobs, or at least it has historically in the region. So people felt like they'd be speaking out against their uncle or cousin or dad who worked at a coal mine, or they'd be getting dirty looks at a grocery store.

But I think one moment when it felt like the story really clicked into place is when I talked to a man named Miles Hatfield. He lives in Eastern Kentucky. He lives sort of downstream or downhill from an old Alpha mine called Love Branch. And the mine was transferred to Lexington as part of the big, as part of the big asset transfer. And he complained, even before the transfer, that there was flooding onto his land. It had made his yard into sort of a red marsh.

But the transfer to Lexington went through, and just as Alpha had not cleaned up the land or stopped the flooding of his home, Lexington didn't stop it either and he ended up having to move. To me, that was a perfect example of a mine that had been owned by Alpha and transferred to Lexington and not cleaned up by anyone and then was hurting someone that lived right next to it. At that time, I think it was named Alpha, but they switch back and forth. To my understanding, they jump in and out of bankruptcy a lot to avoid some things. The water started coming through probably within a year after they quit mining.

My dining room kitchen fell in. There wasn't no warning when it fell. In a bat of an eye, I was in four foot of water, which I didn't know was there until I went in it.

It took me about 20 minutes to get out of the hole that I was in, and I went upstairs and told my wife. She couldn't believe it. She come down and where we did have a kitchen and dining room, we didn't have it anymore.

When that floor fell, that took all the water lines out. So we didn't have water. We couldn't really live down here, so we got lucky and got to rent a house about a mile down the road there. But there's nothing to do up here.

I keep the grass cut, and that's about it. I would appreciate if they would step in and take care of what damage they did. They can't deny it, because the scientists, they were here three different times, but they did say this was from that coal mine. They said it was their water that's done this damage. Not all coal companies are that bad, it's just some of them get the coal and get out. The problem with SMCRA at this point is that the requirements for reclamation are unclear and there isn't enough money available to do the reclamation.

It's $11.3 billion that taxpayers are paying for coal companies that went out of business and did not leave money around for the cleanup of what they left behind. It's really easy for coal companies to convince state regulators to give them a lot of leeway for how long it takes them to do reclamation. The DEP, Department of Environmental Protection here in West Virginia, is a state agency, and as such, they're ran by the state government. Well, who in this state runs the state government? It's the coal industry.

And so, in that way, the coal industry is much like a a self-regulating entity. So we're going up Kayford Mountain Mountain right now. Really, Kayford is a perfect example to show folks of how reclamation is a farce, because there's no way you can build back one of the most biologically diverse ecosystems on the entire planet with bulldozers and the same hydro seed you see on the sides of interstates. Hydro seed, it's a grass seed mixed with fertilizer, and like chopped up newspaper, essentially. But that stuff will grow on literally anything. You could spray that on my desk and it it'd be ready to cut with a lawnmower next week.

This is all the reclamation or remediation work that they're even liable for. So it looks pretty awful, if you ask me. The way the laws are structured, if you dig ginseng before the 1st of September, that's federal time. That's big, big trouble because it's a rare plant, it's endangered.

But these coal companies, all year round, can blow off the tops of these mountains, some of the most lush, dense forests I've ever seen in my life, you know, some of the most prime ginseng habitat in the entire planet just totally turned into what amounts to a parking lot. The mountain may not be able to be put back exactly like it once was, but people can do good reclamation. And good reclamation is unquestionably better than no reclamation. So we would like to see good reclamation done at all of these mines. A lot of these mines can become productive forest again.

But it takes effort and time and money to do that, and a lot of the coal companies want to avoid putting that much effort in. I think that it is very likely there will need to be federal funding to cover at least some of the reclamation that needs to be done. Most people feel like coal is on a decline.

We're shutting down coal plants in the U.S. The idea is that we'll be using less and less coal since it's such a dirty fossil fuel. That said, we're in an energy crisis right now and there's a lot of coal being mined. A lot of these companies are seeing record profits. Alpha, for example, is doing great.

Its stock is up over 700% from when it left bankruptcy.

2022-12-23 22:05

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