How We Measured the Environmental Cost of Bankrupt Mines — ProPublica

State environmental regulators have a trove of data on coal mines, including their histories, ownership and environmental violations. ProPublica and Mountain State Spotlight obtained this information for West Virginia and Kentucky, which together are home to about half of the nation’s coal mines. We then combined the states’ data with court records of coal industry bankruptcies. The result was a new look at the association between bankruptcy and environmental problems.

Residents of coal mining communities have warned that environmental problems at mines that have gone through bankruptcy often worsen over time, leading to polluted streams as well as flooding and landslides. We wanted to find out how the compliance record at bankrupt mines compared to other operations. We found that mines that have been through multiple bankruptcies in the past decade had a higher median number of environmental violations than nonbankrupt mines. We shared our findings with independent experts and insiders, who said the results provided meaningful new information about the relationship between bankruptcy and environmental damage.

Data Sources

In West Virginia, the Department of Environmental Protection provides a public dashboard with mining permits and violations. Kentucky’s Energy and Environment Cabinet maintains a Surface Mining Information System with details on mining permits and violations. These dashboards are useful for exploring individual mines, but they do not provide data in a format that can be used for a systematic analysis. ProPublica and Mountain State Spotlight received the underlying data from both states in October 2022 in response to public records requests.

In both states, companies obtain separate permits for each mine they operate. The data analyzed for West Virginia includes all coal mining permits with inspections at any point since 1990 and all violations issued since then. The Kentucky data includes information on all coal mining permits and violations issued since the year 2000; data prior to 2000 was not provided because of data quality issues. For both states, we obtained and analyzed data for permits whether or not the mine is currently active or was ever cited by state inspectors.

The data from both states includes a mining permit’s identification number that was tracked across owners, and which we used as our main unit of analysis. In Kentucky, the permitting data showed the owner at any given time, even if it changed hands. In West Virginia, the permitting data did not specify when a permit changed owners, but it did list the owners at the time of each inspection. Changes in those listings enabled us to determine when ownership changed.

Two federal agencies, the Office of Surface Mining Reclamation and Enforcement and the Mine Safety and Health Administration, also maintain data on mines, including limited information on certain environmental violations. However, we found that environmental violations are most comprehensively recorded in state mining data. OSMRE data was useful in clarifying mine ownership in some cases.

We created a database of coal mining companies that went through bankruptcy between 2012 and 2022. We identified bankruptcy cases using a list compiled by S&P Global Market Intelligence, and supplemented it with those companies’ subsidiaries and affiliates from relevant court filings. The resulting list encompassed 63 bankruptcy cases, comprising more than 1,100 corporate entities. We then matched this list with environmental citations from state permitting data.

Identifying Bankrupt Mines

Our analysis categorized mines as having gone through bankruptcy or not. A company’s bankruptcy filings do not always specify on a permit-by-permit basis which mines it owned at the time. We identified mines as having gone through bankruptcy if the owner of the mining permit also appeared as a parent company or subsidiary in our bankruptcy list at the time the bankruptcy was declared.

Matching the permittees to the names in bankruptcy filings was complicated by the numerous ways that a company name can be recorded. An entity named “Mining Company,” for instance, could be entered as “The Mining Company,” “Mining Co.,” “The Mining Co. Ltd,” “Mining Company Limited” and so on. To unify these data sources, we employed a machine-learning utility called csvdedupe, made by Dedupe.io. The algorithm was specifically designed to connect variations of names for the same entity.

Each name match was reviewed by reporters; any differences beyond abbreviations or punctuation were further confirmed by reviewing ownership data from OSMRE. We also identified a handful of matches by reviewing corporate structures and name changes recorded in the OSMRE data. It is possible that our method failed to identify some bankrupt mines, if the owner’s name was not matched by the algorithm or identified in our searches of the OSMRE database.

Our analysis was limited to permits for surface and underground mines. It excluded a small number of permits in each state where the data indicated that mining operations had never started. States also issue permits for other facilities such as coal preparation plants and coal slurry impoundments, which can be associated with significant environmental problems. However, of the other types of permits issued, only preparation plants were defined the same way by both Kentucky and West Virginia, and they accounted for a small percentage of permits overall. We decided to limit our comparison to mines and not other kinds of properties mining companies might own.

All violations were counted equally in our analysis. That’s because determining the severity of a violation would require reviewing narrative details of hundreds of thousands of environmental citation records. The violations are issued by the states’ environmental protection agencies and can involve a variety of infractions. The most common involve environmental issues such as water pollution and sediment control. Some less common types of violations, such as failure to maintain proper insurance and signage, may not directly cause environmental damage, but can have ramifications for safety and surrounding communities.

Blackjewel mines were defined as those owned by Blackjewel at the time of the bankruptcy. Some have since been sold.

In calculating the median number of violations for mines that have gone through multiple bankruptcies, we decided to include all violations throughout a mine’s history, regardless of the owner at the time of the violation or whether the violation occurred before or after the bankruptcy. We didn’t make any distinction, because an environmentally troubled mine could be more likely to end up in bankruptcy, or bankruptcy proceedings could exacerbate a mine’s environmental issues.

Our analysis found that surface and underground mines that have gone through multiple bankruptcies in the past decade had a higher median number of environmental violations than nonbankrupt mines. We focused on the median number of violations, not the mean, because a small number of mines had a very large number of violations, which could have skewed the results.

In Kentucky, mines that have gone through multiple bankruptcies in the past decade had almost twice the median number of environmental violations as those that have not gone bankrupt…

…And in West Virginia, they had almost one-and-a-half times as many.

In both states, the median number of violations among mines that have gone through at least one bankruptcy was higher than those that have not gone through bankruptcy, and lower than those that have gone through at least two bankruptcies. The number of violations per mine is not comparable between states. Each state’s department uses different processes to impose violations for mines. In addition, the time periods analyzed for the two states are different.

Of the 210 bankrupt Blackjewel mines in our database, including 197 in Kentucky and 13 in West Virginia, almost half have gone through at least two bankruptcies. The vast majority of those — 101 of 103 — are in Kentucky.

In Kentucky, Blackjewel mines that have gone through at least two bankruptcies had a median of 16 environmental violations, more than twice the rate for nonbankrupt mines in the state.

Limitations

In preparing our analysis, we shared our results with bankruptcy experts, former industry officials and environmental advocates. Experts generally endorsed our methodology and said our findings were noteworthy, and also emphasized areas where more research is needed. But they also cautioned that many factors other than bankruptcy could affect the environmental record for a mine. The size of a mine, its age, its production capacity and even the geographic area where it was located all could factor into its tally of environmental violations.

Mining companies are usually required to remediate, or “abate,” environmental violations they cause; in some cases the process takes months or years. Future research could delve into how long it takes for environmental violations to be fixed at bankrupt mines, though doing so would present some challenges. It is often unclear from the data when a particular violation was abated, if ever. Additionally, mine operators can appeal certain violations and fines, and in those cases it cannot always be determined from the data if those appeals were successful, were dropped or are still pending.