WASHINGTON (Reuters) - The Obama administration is concerned that a subsidy of coal mine cleanup could leave taxpayers with multibillion-dollar liabilities, a U.S. Interior Department official said on Tuesday.
The program, known as self-bonding, allows some of the country’s largest coal companies to forego insurance on a share of future mine cleanup costs.
Roughly $3.6 billion in self-bond liabilities could fall to taxpayers and righting the program “is a huge priority,” said Janice Schneider, Assistant Secretary for Land and Minerals Management at the Interior Department.
The coal industry has been battered by new pollution controls and an abundance of natural gas in recent years with investors predicting some leading companies could fail.
Coal operator Alpha Natural Resources Inc left behind more than $670 million in self-bond liabilities when it filed for bankruptcy in August and officials have not determined how best to protect taxpayers from that hit.
The Interior Department has taken no concrete steps to buttress the self-bond program since regulators first raised alarms in April, officials have said.
Speaking to reporters after a congressional hearing, Schneider said: “We are trying to move very quickly to address the situation,” but she offered no details or a timeline of what might come.
Meanwhile, some coal-producing states have been left guessing how best to shield themselves from cleanup costs.
Wyoming and West Virginia separately negotiated terms with Alpha Natural Resources to cover only a fraction of outstanding self-bond liabilities.
The Interior Department did not bless either of those deals, Schneider said.
“We do have some concerns about that,” Schneider said. “We are looking at our options.”
Indiana is carrying roughly $163 million in self-bonding liabilities from Peabody Energy and officials there are concerned.
“Do I like it? Probably not. But it’s something I inherited. And it’s not something I can change overnight, either,” said Steve Weinzapfel, director of the state Division of Reclamation.
“From the federal standpoint, if they are concerned with (self bonding) then I think they need to change their regulations to address it.”
Interior Department Secretary Sally Jewell could face questions on the self-bond program when she faces a Congressional hearing early on Wednesday.
Reporting by Patrick Rucker, editing by G Crosse