As coal mines begin filing for bankruptcy, Powder River’s push for new self-bonding rules may save Wyoming taxpayers billions.
On Tuesday, February 19, the Wyoming Environmental Quality Council voted unanimously to reform the state’s coal mine reclamation self-bonding program, a major win for taxpayers and the public purse.
“Today is a proud moment for Wyoming: We now have the toughest self-bonding rules in the nation,” said Bob LeResche, former WORC chair from Sheridan, Wyo. “With a 5-0 vote, the state Environmental Quality Council approved new rules limiting self-bonding of coal mines. This was a critical step allowing the state to better manage the risk of over $2 billion in strip mine reclamation bonds in Wyoming.”
Self-bonds are a promise to pay for legally required coal mine cleanup, known as reclamation, without providing any collateral. If a self-bonded coal company liquidates before completing reclamation, the public is left without sufficient funds to do so. Most western states accept self-bonds for coal mine reclamation, a problem that Powder River Basin Resource Council and WORC have been confronting for years.
“This was a critical step allowing the state to better manage the risk of over $2 billion in strip mine reclamation bonds in Wyoming.”
Back in 2016 and ‘17, WORC participated in the bankruptcy proceedings of the country’s three biggest coal companies, Peabody Energy, Arch Coal, and Alpha Natural Resources, each of which had mines in Wyoming. Our goal was to end the companies’ use of self-bonding to back $2.3 billion of coal mine reclamation. By participating in the court proceedings, we successfully required the companies to substitute reliable and secure reclamation bonds. This took the pressure off taxpayers and coal communities, which could have been left holding the bag for the cost of reclaiming more than a dozen massive strip mines covering 165 square miles of mined area.
At the height of the self-bonding crisis, the federal government began the process of restricting the use of self-bonds, only to abandon its work under the Trump Administration. Over the last year, the state of Wyoming took up the reins. Against the will of the coal industry, and with the grassroots support of Powder River, WORC, and others, state governing bodies pushed through a package of policy reforms. This week, the Environmental Quality Council voted 5-0 in favor of their approval.
“With today’s uncertain coal market, and the huge scale of Wyoming’s mines, self-bonding the old way had become much too risky.”
“With today’s uncertain coal market, and the huge scale of Wyoming’s mines, self-bonding the old way had become much too risky,” LeResche said.
In effect, the rules lock in the status quo post-bankruptcy: single product coal companies will be restricted from self-bonding, but self-bonds will continue to be accepted where they are guaranteed by electric utilities or other creditworthy counter-parties. Even with utility-guaranteed mines, the rules limit self-bonds to 70% or less of the required bond amount, ensuring the state will have access to substantial funds even if a mine operator forfeits its bond.
The rules will not be completely final until the expiration of a review period by the new governor and a council of state legislators.
LeReche who has been pushing for self-bonding reform for years was pleased by the outcome. “We are delighted to see the Wyoming Department of Environmental Quality and the Environmental Quality Council took this step to protect Wyoming taxpayers.”