Environmentalists are watching the nation's major financial institutions following Bank of America's recent announcement that it will phase out backing of some companies that engage in a controversial coal-mining method.
Activists from groups such as the Rainforest Action Network and the Natural Resources Defense Council say they will keep up pressure on banks they identify as major lenders to companies that practice mountaintop removal, a coal-mining method that involves exactly what it suggests.
For now, that means Citi, Bank of America and possibly Chase, said Scott Parkin, a grassroots organizer with RAN's Global Finance Campaign. Local banks, like Wachovia, aren't in the cross hairs so far. (Wells Fargo, whose merger with Wachovia is set to final Jan. 1, was in those cross hairs a few years ago.) "Our strategy is to go for the ones that have bigger amounts of financing," said Parkin.
Still, they have not ruled out expanding their campaign. And it appears that Wachovia and Wells Fargo both have financial ties to mountaintop removal coal mining, though those ties are not as extensive as those found with the targeted banks. Wachovia, for instance, has underwritten stock offerings for Massey Energy, according to filings with the Securities and Exchange Commission. Massey in 2007 was the largest coal mining company in central Appalachia, according to Energy Ventures Analysis, a research firm.
Wachovia spokeswoman Alex Ball, citing the merger, directed questions to Wells Fargo, which did not respond to a request for comment.
Appalachian community activists have organized for years against financial backers of mountaintop removal. More recently, however, environmental activists have levied more expansive, visible campaigns -- campaigns Charlotte saw firsthand in October 2007 when RAN activists hung a banner Uptown reading "Bank of America: Funding Coal, Killing Communities."
RAN's most recent day of action was in mid-November just weeks before Bank of America's decision, posted on the bank's Web site, to "phase out financing of companies whose predominant method of extracting coal is through mountain top removal."
The statement continued, "While we acknowledge that surface mining is economically efficient and creates jobs, it can be conducted in a way that minimizes environmental impacts in certain geographies."
The announcement followed a trip by Bank of America executives, including the chairwoman of its environmental council, to Kayford Mountain, a poster child for mountaintop removal, said Rob Perks, director of the NRDC's Center for Advocacy Campaign. "I think that really had an emotional impact," Perks said.
Bank of America's announcement has elicited plaudits from environmentalists, as well as a few skeptical jeers from critics who suggested the move may be little more than a public relations ploy. A bank spokeswoman told The State Journal of Frankfort, Ky., that the bank would be phasing out funding of companies that get more than half of their coal from mountaintop removal.
And it appears that few companies may meet that standard: The Associated Press wrote that few of the largest U.S. producers "get more than half their coal from mountaintop mines, and few borrow significant amounts of money" from Bank of America. Indeed, one prominent Bank of America debtor, Massey, in 2007 extracted only 47 percent of its coal from surface mining, according to a CL review of documents filed with Securities and Exchange Commission. Another large producer, Arch Coal, got 80 percent of its coal from surface mining that year. Surface mining includes mountaintop removal and other coal-extraction methods.
Still, environmentalists and Appalachian community activists are claiming victory. "We hope it will be the tipping point for the industry," Perks said. "Here you've got a corporate actor, a lender to these companies, saying, 'We don't want to be associated with it.' That could have an immediate effect on loans for these companies."
Bank of America set no timetable for phasing out such funding, however, and environmentalists are seeking more disclosure and action from the bank. "We'd like to see them take a stronger stand and not fund any mountaintop removal, but at least it's recognition," said Vernon Haltom, co-director of Coal River Mountain Watch, based in Whitesville, W.V. "That's progress."
Mountaintop removal mining involves clear-cutting hardwood forests and vegetation and using explosives to blow off top rock layers. Tons of dirt is then scraped away, exposing buried coal. The resulting debris and sludge often ends up dumped into nearby valleys and streams — a phenomenon called valley fills — and vegetation is then replanted. It's done mostly in eastern Kentucky and southern West Virginia.
The U.S. Environmental Protection Agency estimated that 724 stream miles were covered by valley fills between 1985 and 2001. A 2005 EPA report suggests that, barring further restrictions on the practice, about 2,200 square miles of Appalachian forests will be eliminated by 2012,
Critics contend the practice is an environmental disaster that yields terrible hazards for Appalachian residents, among them health problems, landslides, flooding and loud construction blasting that can damage homes' foundations.
Proponents of the practice, however, say it's a cost-efficient method of mining the resource that provides half the world's electricity. They point also to the flat land created for use in an area where level surfaces are at a premium.
Mountaintop removal has been a particularly controversial aspect of coal mining; many of those who have targeted bank financing of the practice want to go further and see the end of coal as an energy source.
Major banks, including Wachovia, Wells Fargo and Bank of America, have published environmental pledges. The three also are signatories to the Equator Principles. The initiative, according to Wachovia's Web site, commits the banks to apply principles to global project financing "to mitigate social and environmental risk factors."