This aerial photo from fall of 2014 shows open-pit coal mining operations in the southern Powder River Basin. (Dustin Bleizeffer/WyoFile, courtesy Lighthawk.org)

Coal mines in Wyoming are big. Really big. The Powder River Basin produces over 40 percent of the nation’s coal and the dozen mines in Northeast Wyoming cover hundreds of square miles. Mining creates giant pits and rearranges the countryside, which needs to be put back together and returned to productive use. This restoration is called “reclamation” and state and federal laws require that coal mining companies do the work and pay for it. This means a lot of jobs — except when companies go under, walk away from their mines and leave huge liabilities for taxpayers.

Most Wyoming optimists and “Friends of Coal” these days believe the coal industry dodged a bullet in the last couple of years. Coal production has stabilized (but at a lower level), big companies have emerged from bankruptcy with stronger balance sheets and the risk of mines going under in the short term seems smaller than it did not too long ago.

So why worry about this cleanup liability? We should worry because the market for Wyoming’s coal is shrinking. The contraction is a trend, not a blip. Coal just can’t compete in a new energy marketplace flooded with low cost natural gas, wind and solar. Profit margins of Powder River Basin mines are slim to none. As mines become unprofitable, companies offload them — along with their cleanup liabilities — onto someone else. As successive owners fail, that someone else could be you and me as Wyoming taxpayers.

Here’s where bonding comes in. Every coal mine in Wyoming is required to post a reclamation bond — basically an insurance policy which guarantees that even in the worst-case scenario our state will have the funds to hire workers and contractors to clean up the mines.

Wyoming’s Department of Environmental Quality wisely proposed a new set of bonding standards that help meet that objective. Importantly, this proposal limits the controversial practice of “self-bonding.”

Self-bonds really are not insurance at all, but merely promises from a company that they will cover the reclamation costs of their mines. These IOUs become worthless when a company enters bankruptcy. Self-bonding became a big problem in Wyoming when our three biggest coal companies restructured through bankruptcy over the past couple of years, with over $1.5 billion in self-bonds. Yes, that’s billion with a B. Since self-bonds aren’t backed by a bank or other third party, the state was at the rear of the collection line during bankruptcy proceedings. That means if a company liquidates or sells off properties, Wyoming taxpayers will be left holding the bill for cleanup costs. DEQ’s proposed standards limit the share of cleanup liability that can be self-bonded and require that companies have at least minimal official credit ratings to use self-bonding at all. This makes sense since the state is essentially extending its credit line when it allows a company to self-bond.

Subscribe for free.

Unfortunately, at a hearing in Gillette at the end of March, DEQ’s Land Quality Advisory Board prioritized minor complaints from coal and utility interests over the clear interest of the public. The board refused to accept the proposed standards, and sent them back to DEQ for more review and justification. In doing so, the board missed an opportunity to ensure taxpayers are protected and there will always be enough money for mine reclamation work and, significantly, for reclamation jobs.  

Even though the standards were sent back to DEQ with vague comments, the agency should not meekly weaken the proposed limits on self-bonding. If anything, they should strengthen their proposed standard and eliminate self-bonding — and its corresponding risk — altogether.  

When the rules come back to the advisory board June 27, let’s hope they protect Wyoming’s interests and jobs. The board should approve stronger standards for reclamation bonds, which will ensure reclamation jobs get done and we taxpayers are not liable.

Bob LeResche

Bob LeResche is a former Commissioner of Natural Resources of Alaska, energy executive and investment banker. He and his wife Carol own a ranch and heirloom vegetable farm near Clearmont, Wyoming. He is...

Join the Conversation

1 Comment

Want to join the discussion? Fantastic, here are the ground rules: * Provide your full name — no pseudonyms. WyoFile stands behind everything we publish and expects commenters to do the same. * No personal attacks, profanity, discriminatory language or threats. Keep it clean, civil and on topic. *WyoFile does not fact check every comment but, when noticed, submissions containing clear misinformation, demonstrably false statements of fact or links to sites trafficking in such will not be posted. *Individual commenters are limited to three comments per story, including replies.

Your email address will not be published.

  1. Wyoming needs to stand up for the billions of dollars put back into the local state and National economy!
    Self bonding is a practical way for companies to remain and reinvest in Wy. The thousands of acers already reclaimed show the good faith of the companies to reclaim their lands.
    There are also billions of unused dollars in the Federal abandonded mines fund that can be used if bankrutcies take a company down. The jobs that have been and hopefully remain by far benifit Wy. over the scare tactics being pushed fear over self bonding.
    Every company is paying into ababdoned mines fund yearly and very little is ever used for reclamation.
    Jobs and taxes already paid by far have benefitted our state and nation.
    The PRBRC over and over cause companies millions of dollars mostly lining the pockets of greedy lawyers.
    You don’t trust the companies you don’t trust the state but you want us to trust you and the lawyer activists who are lining there pockets?
    If you want to help your cause shut off your air conditioners, shut off your heat in the winter and quit buying that nasty gasoline for your cars!
    Bob LeReshe the author of this article has an organic heirloom vegetable farm!? I am sure that creates a lot of jobs and stimulates our economy!