Need for coal leasing moratorium reinforced by Department of Interior Inspector General report

Posted on June 12, 2013 by Joe Smyth

Coal strip mined in the Powder River Basin of Montana and Wyoming is the source of 13% of US carbon pollution

A new report from the Department of Interior’s Inspector General highlights several problems with the way DOI gives taxpayer-owned coal to companies like Peabody, Arch, and Cloud Peak Energy, including flaws in the way DOI calculates fair market value (FMV) and a failure to consider increasing coal exports. The report reinforces the need for a moratorium on federal coal leasing, as outlined in a letter to Secretary Jewell on her first day in office which noted these and other concerns. The New York Times reports: Continue reading →

Peabody Energy creates company “designed to fail,” dumps pensioners and union members in it

Posted on March 25, 2013 by Jesse Coleman

Originally posted to PolluterWatch

Peabody Energy, the largest coal company in the US and one of the largest in the world, is once again embroiled in controversy over shady treatment of employees.
Photo courtesy Cathy Sherwin
In 2007, Peabody Energy created Patriot Coal, a spin-off company comprised of Peabody’s eastern US mines. According to lawsuits involving the United Mine Workers (UMW), Patriot was formed as a place to stash union mines in West Virginia and the Midwest, along with the significant pension and health-care obligations that these eastern mines held. According to UMW, Patriot was essentially a “company created to fail,” to give Peabody Energy and Arch Coal (another major US coal company who sold union mines to Patriot) an easy way to avoid paying union pensions and health-care benefits, while continuing to profit from their giant, nonunion surface mines in the Powder River Basin of Montana and Wyoming.

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Ambre Energy’s risky bet on US coal exports

Posted on February 13, 2013 by Joe Smyth

Ambre Energy's losses dwarf its revenues. From Sightline Institute, "Ambre Energy, Caveat Investor"

It’s not a good time to be a coal industry executive in the US. Last year, wind power made up nearly half of all new installed electricity generation, and domestic coal use is on the decline year after year. With dimming prospects at home, companies are in a race to export US coal to foreign markets. Some of the coal companies pushing to export US coal are relatively well known, especially for their long history of environmental and labor abuses - think Peabody and Arch. But until now, little has been known about Ambre Energy, the Australian company pushing two of the controversial coal export terminals in Washington and Oregon. A new report from the Sightline Institute, “Ambre Energy: Caveat Investor” digs deep into the inner workings and shaky footing of this startup – and for the communities and investors weighing Ambre’s promises, the results are not pretty. The report details the many challenges facing Ambre in its aspirations of becoming a true planet-destroying coal titan.

To begin with, Ambre has accumulated $124 million in losses, while collecting only $6.6 million in revenues over the last 7 years. An earlier coal project in Australia collapsed in the face of opposition from farmers and the local government, and Ambre now admits it lost $10.9 million in the process. With the cancellation of that Australian project, the company barely qualifies as a coal company – only because of two failing coal mines in Montana and Wyoming they purchased from previous owners who were planning to close them. Now, the company is on the hook for hundreds of millions of dollars in liabilities for mine reclamation and cleanup, retirement benefits, and other costs at those mines. Meanwhile, Ambre recently announced layoffs of 75 people at one them, the Decker mine, amid a lawsuit from its former partner Cloud Peak Energy. Continue reading →

Coal companies’ scheme to dodge royalty payments draws federal investigation

Posted on February 8, 2013 by Joe Smyth

One of the many subsidies that coal mining companies like Arch and Peabody enjoy is coming under increased scrutiny from federal regulators. The Department of Interior (DOI) announced that an investigation has been launched to determine if coal companies are using sister companies to reduce the royalties they owe when exporting taxpayer-owned coal to foreign markets. The federal probe follows a Reuters investigation that found that “By valuing coal at low domestic prices rather than the much higher price fetched overseas, coal producers can dodge the larger royalty payout when mining federal land.”

In a letter to Senators Wyden and Murkowski, Secretary of the Interior Ken Salazar promised that DOI’s Inspector General will “aggressively pursue any company found in violation of the laws and regulations related to the valuation of Federal coal.”

This internal investigation follows another investigation currently underway at DOI focused on the coal leasing program run by the Bureau of Land Management (BLM). Without proper oversight, sham “auctions” run by BLM have allowed coal companies to secure taxpayer-owned coal for around $1 per ton. According to a report by Tom Sanzillo of the Institute for Energy Economics and Financial Analysis, this has amounted to a $28.9 billion subsidy over the last 30 years. In addition to DOI’s internal review, the BLM’s coal leasing program is also under review by the General Accounting Office.

It appears that coal companies are trying to bilk taxpayers at every available opportunity, and so far our federal regulators seem to have been asleep at the wheel. Hopefully these investigations signal that they are starting to wake up. After all, there are some pretty aggressive drivers out there – here’s how a spokesperson for one of the coal companies tried to defend their approach: “In my neighborhood, I don’t stop at every block. I could. But that’s not where the stop signs are. You can say you don’t like the regulations, but we play by the rules.”

With the US coal industry desperately seeking shortcuts, we need more vigilance at the Department of Interior – and probably a few more stop signs.