As part of an agreement with the Department of Interior and other U.S. regulatory agencies, Alpha Natural Resources will replace its controversial self-bonds for the company’s Eagle Butte and Belle Ayr Mines in the Powder River Basin of Wyoming. On July 7, 2016, a bankruptcy judge in Virginia approved the agreement, along with other key parts of Alpha’s bankruptcy reorganization plan, including the sale of its Wyoming mines to a new mining company – Contura Energy.
“We are delighted that Interior’s Office of Surface Mining, Reclamation and Enforcement and the U.S. Department of Justice stepped into the Alpha bankruptcy case and refused to accept continued self-insurance for reclamation liabilities,” said Bob LeResche, Chair of the Powder River Basin Resource Council and Past Chair of WORC. “Risky self-bonds at Alpha’s two Wyoming strip mines will now be replaced with safe third-party-backed bonds.”
Under the agreement, Contura will apply to transfer the Wyoming mine permits to the new company. As part of that transfer, Contura will not be able to use self-bonds. Instead, the company will use surety or collateral bonds, backed by assets and financial guarantees from third-party banks and surety companies, to cover $411 million in unsecured cleanup costs in Wyoming.
“Alpha’s provision of ‘real’ bonds should set a clear precedent for Wyoming officials, who seem to believe that self-bonding still has a place in regulating huge strip mines,” LeResche said. “If our goal is to protect Wyoming taxpayers and insure that timely reclamation occurs, self-bonding should never again be allowed.”
Self-bonding has come under fire from citizen groups, federal officials, and Members of Congress because of the risk it presents to taxpayers and its wide-use by bankrupt coal companies, such as Alpha, Arch, and Peabody. Many observers fear that bankrupt coal companies will be able to shift their huge liabilities for reclamation, or restoring land that has been mined, to taxpayers.
“We hope this standard continues as Arch Coal and Peabody Energy exit bankruptcy as well,” LeResche said. “Arch has already announced they will be capable of buying third-party bonds and Wyoming should insist upon it. Self-bonding has made Wyoming taxpayers potentially liable for hundreds of millions of dollars of clean-up work as coal companies declare bankruptcy.”
The Resource Councils have engaged in state and federal permitting actions and the bankruptcy process to advocate for replacement of self-bonds to ensure that coal mining companies bear the costs of mine reclamation rather than the public.
“The bankruptcy court’s elimination of Alpha’s self-bonds is a big achievement for the people of Wyoming,” LeResche said. “Concern over reclamation is why our groups got involved in bankruptcy proceedings in the first place. We need to end the risky policy of self-insuring clean-up at Wyoming’s coal mines.”
As Alpha rushes to emerge from bankruptcy, WORC will continue to review financial projections for the emerging entities as well as adjustments to the reclamation bonds at Alpha’s former mines.