By Dave Fehling, KUHF News for StateImpact Texas
HOUSTON – Texas may be known for its oil but it’s also a coal state. And now, there’s concern over what the state is doing to ensure that old “strip mines” are cleaned-up. State Impact reporter Dave Fehling found that one Texas Company in particular is now getting special scrutiny.
Coal is in the gently rolling hills of East Texas where Charles Morgan lives.
CHARLES MORGAN: ““They’re hauling this coal in huge dump trucks. Huge dump trucks.”
It’s a low-quality coal called lignite, found just beneath the top soil. Enormous mechanical shovels gouge out and load tons of it onto trucks. They take the coal to nearby power plants. Decades of doing this have left enormous gorges that run for miles. Under federal law, the damaged land has to be “reclaimed” or restored to protect groundwater sources. Morgan is usually a critic of the coal-burning power plants because of the air pollution they emit. But when it comes to the coal mines?
MORGAN: “You go out there it looks nice. It’s got grass planted over the areas. They’re doing a good job reclaiming the sites; I can’t say they’re not.”
So, what’s the problem?
ILAN LEVIN: “These clean ups are very expensive and can take many years to do right.”
Ilan Levin is a lawyer with the Environmental Integrity Project. He is among environmentalists concerned about future clean-ups by one company in particular. Luminant Mining Company, formerly TXU, owns more mines in Texas than any other operator. Luminant’s Dallas-based parent company, Energy Future Holdings, is considering re-organizing under Chapter 11 of the bankruptcy code.
AL ARMENDARIZ: “We’ve been reviewing documents over the last six months.”
Al Armendariz is with the Sierra Club.
ARMENDARIZ: “In this case, it doesn’t appear that any money has been set aside that Texas regulators could use in case the company goes bankrupt or they walk away from any of these mines.”
Here’s how he came to that conclusion. Texas requires mine operators to ensure they can pay for reclamation by posting a bond. In the case of Luminant’s mines, the potential reclamation cost could be around $1 Billion. But instead of using an outside company for the bond, Luminant Mining uses…Luminant Generation. In other words, pledging the company’s own power plants as collateral.
Such self-bonding is not allowed in some coal states for fear that a bankruptcy might leave little or no money for reclamation. But it’s OK in Texas where state regulators have approved Luminant’s self-bond. For years, Luminant’s parent company has said in annual reports to Federal regulators that it could meet Texas requirements to come up with the money for the reclamation and other regulatory obligations. To quote a line repeated year after year in the reports, “we believe we have adequate liquidity to satisfy such requirements.” But in a 2012 report, the line disappears.
SMITTY SMITH: “It was the smoking gun.”
A smoking gun, at least to Smitty Smith, a long-time coal opponent with the group, Public Citizen.
SMITH: “If there’s no money to clean them up, suddenly the state is going to have to come up with a billion dollars to restore these sites.”
The company wouldn’t comment specifically on the record about the missing line. But in a general statement emailed to StateImpact, said there’s no reason for environmentalists—or taxpayers—to be concerned. Quote: “We fully satisfy the bonding requirements of the Railroad Commission of Texas for our coal mines, which means that our reclamation obligations are guaranteed. No matter what happens in a potential restructuring process, Luminant Mining will continue to satisfy all of its reclamation and environmental obligations.” End quote.
Nonetheless, the Railroad Commission of Texas which regulates mining says it’s now requiring Luminent to provide sworn statements every three months attesting that its self-bonds are still good. The Sierra Club and Public Citizen say they’re asking the Commission to take a harder look at Luminant’s finances to make sure the money will be there.
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