Public Citizen, Sierra Club Ask Regulators to Stay Vigilant to Protect Taxpayers, Environment from Wall Street Abuse
AUSTIN–(ENEWSPF)–April 14, 2014. After nearly two years of advocacy, the Sierra Club and Public Citizen have learned that when Energy Future Holdings files for bankruptcy, the Texas Railroad Commission will no longer accept Luminant Mining’s “self-bonding” to cover nearly one billion dollars in mining clean-up obligations and will require real cash bonds to ensure that taxpayers are not left with a massive bill if mines are closed or abandoned. This development marks the first time state regulators have acted to protect taxpayers from the consequences of EFH’s financial distress. Luminant Mining is a wholly-owned subsidiary of Energy Future Holdings, based in Dallas.
Although the Railroad Commission’s actions are a positive development, leaders with Public Citizen and the Sierra Club called on the Railroad Commission to ensure that Luminant Mining and any new owners of Energy Future Holdings are held to the highest standards of the law.
“After months of trying to convince the Texas Railroad Commission and the Attorney General that EFH could leave taxpayers with a billion dollar bill, it appears that regulators are finally planning to take action,” said Tom “Smitty” Smith, director of Public Citizen’s Texas office. “But these regulators must remain vigilant: they can’t allow the new owners of Energy Future Holdings to slip through loopholes that leave taxpayers footing the bill. This is only the first step.”
Under federal law, mining companies are required to set aside money for clean-up of mines so resources will be available even if the mines are abandoned. The law was created because many mines were abandoned across the United States when companies went bankrupt, leading to contamination of surface water and groundwater.
“Sierra Club, Public Citizen and our local partners took action to protect taxpayers and the environment when no one else would. We knew EFH’s so-called ‘self-bonding’ wasn’t up to snuff, and as bankruptcy looms larger and larger we couldn’t let Texas foot the bill for up to one billion dollars in mining costs. As we move forward, we’ll work to make sure EFH doesn’t use loopholes to shirk their responsibilities,” said Al Armendariz, senior campaign representative with Sierra Club’s Beyond Coal campaign in Texas.
In Texas, EFH’s subsidiary, Luminant Mining, is responsible for the operation and clean-up of its eleven active strip mines. The reclamation is estimated to cost as much as $1.01 billion. In many states, Luminant Mining would be required to put up a cash bond or pledge financial assets equal to that amount. But Texas’s Railroad Commission, which administers state mining law, has allowed Luminant to “self-bond,” which means it is relying on a “guarantee” without having real cash bonds set aside that the state can readily access.
Although the Railroad Commission’s actions help protect taxpayers against paying for Energy Future Holdings’s financial obligations, the company’s ongoing strip mining operations still take a huge toll on Texans living at or near mines and on the local environment. Neighbors for Neighbors, a group of people living near Luminant Mining’s Three Oaks mine, has been working to fight mining expansion and protect their homes and families.
“Luminant’s strip mines for lignite coal – the dirtiest, lest efficient kind of coal – means sleepless nights, losing groundwater that’s critical to my family and local farming,,” said Russell Bostic, a Sierra Club member and local leader with Neighbors for Neighbors. “The Railroad Commission is taking a good step, but Texans like myself need real protections from the state and from this company. It’s not enough to meet the minimum requirements of the law.”
In October 2013, Public Citizen and the Sierra Club worked with Tom Sanzillo, former deputy comptroller for the state of New York and current director of finance for the Institute for Energy Economics and Financial Analysis, to review Luminant Mining’s self-bonds with the Railroad Commission. Sanzillo’s analysis showed that the Luminant Generation assets used to meet federal and state law requirements for the close to billion dollar “self-bond” are already committed to secure other debt incurred by EFH.