A citizens’ complaint filed Monday asks the Wyoming Department of Environmental Quality to deem Peabody Energy out of compliance for $790 million in coal mine reclamation liability in the state.
Peabody, Wyoming’s largest coal producer and the largest coal miner in the world, is expected to file for bankruptcy protection soon. By determining that Peabody no longer qualifies to self-bond, the state would better secure its claim to the company’s full $790 million reclamation liability, said Shannon Anderson, an attorney for the Sheridan-based Powder River Basin Resource Council.
“It’s pretty clear where this company is headed, so now is the time to take action,” Anderson said. “We believe as a matter of law a company in financial collapse is no longer financially solvent,” and therefore doesn’t qualify to self bond.
Mine operators are required by state and federal law to post bond or guarantee securities sufficient to cover the cost of environmental clean-up at the end of a mine’s life should they abandon operations. Companies that can meet the “self-bonding” classification are not required to secure actual bonds or sureties, but are considered financially sound enough to meet their full reclamation liability.
The Powder River Basin Resource Council and the Western Organization of Resource Councils filed the complaint regarding Peabody, similar to complaints regarding self-bonding qualifications for Alpha Natural Resources and Arch Coal. Both of those companies are already reorganizing under Chapter 11 bankruptcy.
Wyoming DEQ declared in 2015 that Alpha Natural Resources no longer qualified for self-bonding, but struck a deal with the company and bankruptcy court for a $61 million “super-priority” for the company’s $411 million reclamation obligation. The agency struck a similar deal with Arch, securing $75 million in creditor priority plus another $17 million in collateral for the company’s inactive mine operations in the Hanna Basin.
However, Wyoming DEQ has determined that Arch still qualifies under the current set of self-bonding rules and regulations, because the bonding is set up under a private subsidiary owned by Arch. Likewise, Peabody has set up its self-bonding under a privately held subsidiary.
Wyoming DEQ spokesman Keith Guille said the agency’s current self-bonding determination for struggling coal companies is based on the most recent full-year financial reports, which are from 2014. The agency will review self-bonding status again when 2015 financial reports are issued in the next month or so.
“We see some struggling there [with Alpha, Arch and Peabody] and I don’t think anybody denies that,” Guille said.
However, he said, the state must base its determinations on the current set of self-bonding rules and regulations as set by the federal Office of Surface Mining Reclamation and Enforcement, which has also asked DEQ to submit fresh reviews of Alpha, Arch and Peabody self-bonding.
Meantime, there are several calls for re-examining the entire surface mine bonding program, from both the federal and state levels.
“Those discussions are happening with the Office of Surface Mining [Reclamation and Enforcement] and internally here,” Guille said.
— Creative Commons photo by Paul Sableman.
— Read the citizens’ complaint regarding Peabody Energy’s self-bonding status: