On August 9, the federal Office of Surface Mining Reclamation and Enforcement (“OSMRE”) published a Policy Advisory that directs state regulatory agencies to restrict the use and approval of self-bonding. The Policy Advisory outlines three policy suggestions for states to address what the agency calls “the growing threat of coal company bankruptcies.” States should:
- review the eligibility of current self-bond guarantors;
- reject any new or additional self-bonds for at least five years, or until market conditions reach an equilibrium; and
- enforce a five-year warm-up period before new companies that emerge from bankruptcy may apply to self-bond.
The State of Wyoming holds nearly $2 billion in self-bonds, including $1.2 billion from bankrupt companies Arch Coal and Peabody Energy. Alpha Natural Resources recently emerged from bankruptcy with an agreement to replace its $411 million in self-bonds with conventional financial assurance, such as surety or collateral bonds.
Press statement on self-bonding policy
Bob LeResche issued the following statement on behalf of the Powder River Basin Resource Council and the Western Organization of Resource Councils in reaction to OSMRE’s Policy Advisory on self-bonding:
“Bankruptcy should never be used as a haven for a huge corporation to escape its reclamation bonding obligations. It’s clear the agency recognizes that now is not the time to risk taxpayer money on bankrupt coal companies. The actions outlined by OSMRE are important steps for state regulators to deal conservatively with self-bonds. The stakes are high, as one company alone, Peabody Energy, has amassed a $726 million reclamation liability with over 90 square miles of unreclaimed mines in Wyoming. The writing is on the wall: coal companies must replace their risky self-bonds, and we hope the State of Wyoming will follow these helpful guidelines from OSMRE.”
Bob LeResche chairs the Powder River Basin Resource Council, an organization that works to ensure responsible development of Wyoming’s mineral resources. He is Past Chair of WORC, a seven-state network of grassroots community organizations working to shape energy policy and strengthen communities. Bob lives and farms with his wife in Clearmont, Wyoming.