Corporate Citizenship

The Environment


Mountaintop Removal Mining Environmental Due Diligence Process

August 2009


Mountaintop removal (MTR) coal mining is a surface mining method used in the Central Appalachian region of the United States. The use of this method has accelerated since the early 2000s due to fluctuating coal prices, an improvement in equipment efficiencies, an increased emphasis on national energy security, and a favorable regulatory environment.

In recent years the use of MTR mining methods in this region has come under closer scrutiny by a variety of stakeholders and regulatory agencies. To understand the variety of viewpoints on MTR, including environmental, local community and industry perspectives, we conducted an extensive multi-year exercise of researching this issue and learning from external stakeholders.

Citi understands that the mining industry in the United States is highly regulated and that federal agencies have recently agreed on a coordinated approach to review and strengthen regulations governing MTR (Note: An Interagency Action Plan to implement these reforms is found here:

Although Citi does not finance MTR extraction projects directly, we do have banking relationships with clients that practice MTR extraction. Given the intense scrutiny on this issue we believe that Citi's special attention and focus on this sector will help us and our clients understand and manage risks associated with the practice.

Summary of MTR Environmental Due Diligence Process

Citi believes that engagement with clients and civil society can be a productive path forward in addressing challenging issues. Engagement enables Citi to support our clients while at the same time stressing the importance of environmental and social responsibility.

Therefore, Citi has implemented a robust MTR Environmental Due Diligence Process that has been fully incorporated into our credit risk policies and procedures. The Diligence Process is triggered when engaging any client that uses MTR as an extraction method, and includes an MTR Risk Assessment Questionnaire that Citi will discuss with relevant clients as a part of our transactional due diligence. Under certain circumstances, Citi may require an Independent Review.

Prior to new transactions, Citi will conduct appropriate due diligence and evaluate companies that engage in MTR extraction in Central Appalachia, utilizing the following four principles.

  • Regulatory compliance - Citi will evaluate the company's compliance history over time.
  • Exposure to future regulatory changes - Citi will evaluate the readiness of clients to meet changing regulatory requirements.
  • Litigation risk - Citi will evaluate the company's exposure to litigation risk, including the status of existing lawsuits and historical judgments.
  • Franchise risk - Citi will evaluate the company's profile and the extent to which the company is exposed to negative franchise risk.

Citi commits to continuing dialogue with stakeholders and clients on this issue. Based on implementation experience, we will review and revise our MTR Environmental Due Diligence process over time and as regulations change.