Confirming the fears of environmental groups, on March 19 U.S. Bankruptcy Judge Benjamin A. Kahn approved the abandonment of cleanup obligations in thirty-three Kentucky coal mines previously owned by coal company Blackjewel LLC.[1] Approximately 170 other Blackjewel facilities in Kentucky, Tennessee, West Virginia, and Virginia will fall into a legal gray area as the company attempts to sell the mines to other coal companies.[2] Cleanup obligations for any permits not sold or transferred within six months will be abandoned.[3]

Blackjewel’s troubles began in 2019, when the company declared Chapter 11 bankruptcy in West Virginia because of liquidity issues.[4] As demand for coal in the U.S. plunges, Blackjewel’s bankruptcy appears to forewarn of the trouble the coal industry will face.[5]

The U.S. Energy Information Administration (“EIA”) has reported that in 2019, the U.S. generated more electricity by renewable energy than coal for the first time in more than 130 years.[6] The EIA’s report indicates that consumption of coal decreased for the sixth year in a row, reaching its lowest level since 1964.[7]

According to the Surface Mining and Control Reclamation Act, companies such as Blackjewel are required to designate and set aside funds for reclamation work prior to receiving mine approval.[8] The Sierra Club has found that billions of dollars’ worth of reclamation work remains in mining communities across the United States.[9]

Companies that issued bonds guaranteeing Blackjewel’s cleanup funds and the state of Kentucky have indicated that there may not be sufficient funds to successfully reclaim thousands of acres of land and mountains dynamite blasted by Blackjewel and its subsidiaries.[10] By allowing companies to abandon cleanup obligations, rather than using the funds set aside, taxpayers will likely be burdened with cleaning up their local communities.[11] As Peter Morgan, Senior Attorney at the Sierra Club said:

“Unfortunately, this is likely the start of a trend where bankrupt coal companies dump their coal mine cleanup obligations onto communities and taxpayers who simply don’t have the money to pick up the tab. Once a company is liquidating in bankruptcy, it’s too late to fully protect local communities and taxpayers.”[12]

Abandoned mines can pose serious threats to human health and the environment.[13] Mines can catch fire and debris can contaminate water supplies.[14] Water supplies are threated because many abandoned coal mines produce acid mine drainage.[15] During excavation, the metal sulfides typically found in coal are exposed to oxygen and water, reacting to create sulfuric acid.[16] The acid mine drainage poses significant long-term effects on groundwater, community water supplies, rivers, streams, and aquatic life.[17]

There are approximately 500,000 abandoned mines in the United States today.[18] While the exact ramifications of the March 19 decision are unclear, environmental groups such as the Sierra Club fear that Blackjewel’s case is setting a dangerous legal precedent at a time when demand for coal is plummeting and several coal companies near bankruptcy.[19]

[1] Clark Mindock, Blackjewel To Abandon 33 Coal Mines In W.Va. Bankruptcy, Law360 (Mar. 19, 2021), https://www.law360.com/articles/1366899/blackjewel-to-abandon-33-coal-mines-in-w-va-bankruptcy.

[2] James Bruggers, A Bankruptcy Judge Lets Blackjewel Shed Coal Mine Responsibilities in a Case With National Implications, Inside Climate News (Mar. 19, 2021), https://insideclimatenews.org/news/19032021/a-bankruptcy-judge-lets-blackjewel-shed-coal-mine-responsibilities-in-a-case-with-national-implications/.

[3] Id.

[4] Mindock, supra note 1.

[5] Id.

[6] U.S. Energy Information Administration, U.S. renewable energy consumption surpasses coal for the first time in over 130 years (May 28, 2020), https://www.eia.gov/todayinenergy/detail.php?id=43895.

[7] Id.

[8] Surface Mining Control and Reclamation Act of 1977 § 401, 30 U.S.C.A. § 1231.

[9] Press Release, Blackjewel gets approval to drop millions in cleanup costs at dozens of coal mines on taxpayers; millions more likely within the year, Sierra Club (Mar. 19, 2021), https://www.sierraclub.org/press-releases/2021/03/blackjewel-gets-approval-drop-millions-cleanup-costs-dozens-coal-mines [hereinafter “Press Release”].

[10] Mindock, supra note 1.

[11] Id.

[12] Press Release, supra note 9.

[13] Bureau of Land Management, Health Concerns, https://www.abandonedmines.gov/health-concerns.

[14] Why cleaning up abandoned coal mines is so important – and difficult, PBS (Nov. 28, 2016), https://www.pbs.org/newshour/show/cleaning-abandoned-coal-mines-important-difficult.

[15] Groundwater Protection Council, Abandoned Mines, https://www.gwpc.org/topics/abandoned-mines/#:~:text=Many%20surface%20and%20underground%20abandoned,%2C%20streams%2C%20and%20aquatic%20life. (last visited April 12, 2021).

[16] Id.

[17] Id.

[18] Bureau of Land Management, Extent of the Problem,  https://www.abandonedmines.gov/extent_of_the_problem.

[19] Press Release, supra note 9.