Energy Report

Bankruptcies Roil Coal Industry and Worry Regulators

Date: October 14, 2015

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By Brian Sewell

Major coal company bankruptcies in central Appalachia have gone from being inevitable to routine. But as debt-ridden companies strike deals to survive, their ability to meet obligations to workers and clean up mined land is being called into question.

In August, all eyes were on Alpha Natural Resources, which filed for bankruptcy after months of speculation by industry analysts. The company was drowning in more than $3 billion of debt, despite being one of the largest U.S. coal producers.

The president of the United Mine Workers of America, Cecil Roberts, said in a statement that Alpha’s announcement was “no surprise” and that the union is prepared to do whatever it can to maintain the pension and health care benefits “our retirees were promised and have earned.” The company’s bankruptcy filing showed that it owes $600 million to the union’s pension plan.

But commitments to coal miners and retirees are not the only liabilities bankrupt companies face — Alpha has also racked up more than $680 million in mine cleanup costs. And Alpha is far from the only coal company that has filed for bankruptcy in recent years.

Patriot Coal, which entered bankruptcy for a second time in May, agreed to sell its assets without significant liabilities to Blackhawk Mining. The only buyer interested in acquiring the rest is the Virginia Conservation Legacy Fund, which has “no experience operating a coal company” or performing reclamation and water treatment, according to lawyers for the West Virginia Department of Environmental Protection.

Describing the deal as “destined to fail,” the DEP strongly objects to Patriot’s plan, as do regulators in Ohio and Pennsylvania.

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