(Guest column) — The market price of coal has plummeted over the last year, and stock prices of some of the companies so important to Wyoming’s state revenues are lower than they have been for decades. All of a sudden, Wyoming is confronting a major flaw in our use of the Surface Mining Control and Reclamation Act (SMCRA), and a major threat to one of the Act’s key provisions: reclamation.
Cleanup and restoration of the hundreds of square miles of Wyoming ripped up by the world’s largest surface coal mines was thought guaranteed by SMCRA. But these guarantees are beginning to look like so much dust in the wind.
Late last month, Wyoming’s Department of Environmental Quality was forced to do something it had never done before: DEQ told Alpha Natural Resources, a major U.S. coal company, it no longer qualifies to guarantee with a mere promise (or “self-bond”) $411 million in reclamation obligations at its strip mines near Gillette. This state move signals that even bigger problems are to come. Lack of viable reclamation guarantees emphasize that industry’s reclamation efforts, lagging behind for decades, are a problem coming home to roost.
Most would never guess that coal companies in Wyoming — which produces more coal than the next seven states combined — are allowed to operate without posting any kind of outside financial assurance. But that has been true until now. Coal companies were allowed to “guarantee” their reclamation obligations by meeting simple corporate financial fitness tests. But now they are beginning to fail these tests.
Mines in Wyoming are obligated to pay $2.1 billion in reclamation costs, but the state doesn’t hold any financial surety from a bank or insurer to cover these huge obligations. Historically this has caused little concern. But today, with coal company shares trading for pennies, not dollars, and bankruptcy threats looming for most of the biggest operators, it’s a problem that needs serious attention.
Alpha’s troubles are likely just the tip of the iceberg. Both state and federal regulators have begun to scrutinize the ability of companies to cover their bonds, realizing that otherwise taxpayers will be left on the hook for these enormous reclamation liabilities. In Wyoming, the governor and legislators learned a multi-million dollar lesson from recently orphaned oil and gas wells. No one wants orphaned coal-mine cleanup to be next on the state’s to-do list.
The original intent of SMCRA’s bond requirements was to encourage rapid reclamation, so that bonds were no longer required. But regrettably, coal companies don’t have the best track record when it comes to reclamation. Wyoming’s acceptance of “self-bonding” largely removed that incentive. One way to get ahead of today’s problem is to prioritize reclamation at the mines. It’s a simple equation: the less land there is left to reclaim, the less liability exists to be covered by a financial guarantee.
Regulations require reclamation contemporaneous with mining, but the amount of land disturbed and unreclaimed continues to grow. After decades of operating, the nation’s largest mines have gutted 174,000 acres in Wyoming, but only around 6 percent of those acres have been fully reclaimed and the bonds released. This lagging rate of reclamation and the problems it causes at Western coal mines is discussed in a new report released this week by the Western Organization of Resource Councils, the National Wildlife Federation, and the Natural Resources Defense Council: Undermined Promise II.
The report details that in addition to piling up liabilities to the companies, slow reclamation also means more land is left off-limits to livestock grazing, recreation, and wildlife habitat. Ranchers next to mines know this all too well. They’ve had to find other pasture for their livestock as mines have eaten up more and more of the landscape of the Powder River Basin.
Contrary to industry rhetoric, coal won’t be around forever. Geology and economics tell us we’re nearing the end of the best years of productivity at Wyoming’s giant strip mines. The chimera of “self bonds” should be phased out and replaced with real financial instruments. Most important, reclamation should be accelerated while assets are still available to failing corporations. It’s time for Wyomingites to decide what legacy we want to have — a scarred landscape and public liability for cleanup, or healthy land, restored by industry, that can be put back to use for agriculture.
— Columns are the signed perspective of the author, and do not necessarily reflect the views of WyoFile’s staff, board of directors or its supporters. WyoFile welcomes guest columns and op-ed pieces from all points of view. If you’d like to write a guest column for WyoFile, please contact WyoFile editor-in-chief Dustin Bleizeffer at dustin@wyofile.com.