CHEYENNE, Wyo. — The risk that coal companies in Wyoming and elsewhere could leave the public responsible for millions of dollars in mine-cleanup costs is a serious issue being examined by the Interior Department, the agency’s top official in charge of mine regulation told a U.S. Senate committee on Tuesday.
Interior has been working with state agencies to make sure adequate financial arrangements exist to cover reclamation costs for any coal mines that shut could down, Janice Schneider testified before the Senate Energy and Natural Resources Committee in Washington, D.C.
“Taxpayers should not be saddled with the bill,” said Schneider, an assistant Interior secretary who oversees four agencies, including the Office of Surface Mining, Reclamation and Enforcement. Proposed federal regulations that seek to protect streams from coal mining could help some because they contain stricter bonding requirements to cover costs, she added.
Concern about mine reclamation in Wyoming has increased as Bristol, Virginia-based Alpha Natural Resources seeks Chapter 11 bankruptcy protection. The company’s two Wyoming mines carry $411 million in required state bonding.
Under an agreement between Wyoming and Alpha Natural Resources, Wyoming is on the top-priority list for $61 million in reclamation funds in case either of the mines shuts down. Wyoming would remain entitled to the other $350 million, but it would stand in line behind other creditors, if necessary, for that amount.
Until recently, the Wyoming Department of Environmental Quality had allowed Alpha Natural Resources to self-bond, or demonstrate financial ability to cover reclamation costs in lieu of posting an actual bond. The department revoked the company’s ability to self-bond in May.
Alpha Natural Resources filed for bankruptcy in August without addressing the situation by posting bond. Instead, the company and state reached their agreement approved Oct. 8 by a federal bankruptcy judge in Virginia.
Wyoming agreed to receive the equivalent of 15 cents on the dollar in the deal, said Sen. Maria Cantwell of Washington, the committee’s ranking Democrat.
Wyoming Department of Environmental Quality Director Todd Parfitt, who also testified before the committee Tuesday, said he might not characterize the agreement quite that way. “What we did is position ourselves better than we were previously, which would have been at the end of the line for the entire $411 million,” Parfitt said.
Alpha Natural Resources’ ability to cover the $411 million in bonding with cash or some other means besides self-bonding is in doubt, according to court documents. For now at least, the two mines remain open and about 1,000 employees are still at work, Parfitt pointed out.
“They are not behind on their reclamation. They are still operating and reclaiming in accordance with their permit conditions,” he said.
The U.S. Office of Surface Mining, Enforcement and Reclamation isn’t a party to the agreement between Wyoming and Alpha Natural Resources. The federal agency reserves its enforcement rights with respect to that agreement, according to a document filed Sept. 29 in the bankruptcy case.
Wyoming produces about 40 percent of the nation’s coal, far more than any other state. Low prices for natural gas have hit Wyoming’s coal industry hard as utilities have switched over to the cleaner-burning fuel for electricity generation.
The plunging stock values of Wyoming’s self-bonding coal companies over the past five years is a very serious issue, Schneider testified. “We are looking at all possible avenues to make sure that the appropriate financial assurances are in place,” she said.