SHERIDAN — The Powder River Basin Resource Council has submitted a petition to the Department of Environmental Quality to end self-bonding for coal companies in the state, contributing to mounting pressure against the practice.
Federal law requires coal companies secure bonds that will guarantee the costs to restore the land a mine occupies if that mine closes. Self-bonding allows companies to use its own assets to guarantee the funds for land restoration.
PRBRC Executive Director Jill Morrison said the group decided to organize the petition after the Land Quality Advisory Board voted to send a set of rules that would have limited self-bonding back for revisions. The rules were drafted by the Department of Environmental Quality, which is currently working on a revised draft.
“The DEQ had put together a pretty good proposal that really would have restricted when self-bonding could be used,” Morrison said. “Basically [the rules] said it was a privilege, and a privilege for companies that are in very good financial condition.”
The petition PRBRC filed is far stricter than the rules the Land Quality Advisory Board voted to amend; it would eliminate self-bonding altogether in Wyoming and require that 25 percent of a coal-mine operator’s bond be a cash bond. Morrison acknowledged that her group’s proposed changes may not be adopted, but PRBRC wanted to contribute to the argument for limiting self-bonding in the state.
“We wanted to put it out there with supporting evidence to demonstrate why it’s needed,” Morrison said. “Colorado doesn’t allow self-bonding; Montana doesn’t allow self-bonding; the GAO has recommended against it. We are in a new climate for coal.”
Critics of the practice argue that it puts taxpayers and landowners adjacent to a mine at risk — if a coal mine closes because a company goes bankrupt or into forfeiture, the assets that company used to guarantee cleanup costs may be unavailable.
“A self-bond is nothing more than an IOU. It’s a promise to reclaim the land,” Morrison said. “And when you file bankruptcy, there’s no money to do that.”
Travis Deti, executive director of the Wyoming Mining Association, however, said that self-bonding is an important option for coal companies.
He noted that even when the coal industry in the state was booming, some companies struggled to obtain sureties — guaranteed bonds from a third party — to comply with federal bonding regulations.
“It’s just another tool in the toolbox; it’s giving companies flexibility,” Deti said.
Deti added that the WMA is open to revisions that will tighten self-bonding regulations in Wyoming, but the rule changes the DEQ proposed in March were too strict.
“I don’t think we were far apart,” Deti said. “We felt that some of the standards were set a little too high; only a few companies would have been able to use it… If you are going to offer it, a company should be able to use it.”
In early April, the U.S. Government Accountability Office released a report titled “Coal Mine Reclamation: Federal and State Agencies Face Challenges in Managing Billions in Financial Assurance,” which recommended that Congress amend federal law to eliminate the use of self-bonding. The report pointed to problems that arose when several coal companies went bankrupt in 2015 and 2016 and could not meet their cleanup obligations. It also noted that financial regulations have changed since the process was implemented, and judging the financial health of a company is more difficult than it was previously.
The DEQ’s revised rules regarding self-bonding are scheduled to go back before the Land Advisory Board in July.