A dragline boom peeks out from a coal pit at the North Antelope Rochelle Mine in January 2020. (Alan Nash)

Mine operators in Wyoming may soon have another financial tool to help them meet reclamation obligations as coal bankruptcies are making traditional bonding options more expensive and difficult to rely on.

The Joint Minerals, Business and Economic Development Committee will consider the draft Mine reclamation bonding-voluntary assigned trusts bill when it meets Thursday in Casper. The joint committee developed the draft legislation during the interim with broad support from state regulators, industry and nonprofit watchdog groups.

The bill would allow operators to meet all or part of their reclamation bonding requirement by making cash payments into an assigned trust.  The account would earn interest without the usual fees charged by surety companies. Annual payments could be made for up to 10 years to meet an operator’s total bond obligation, creating a potential cash asset when reclamation is completed and helping mine operators avoid the increasing cost of acquiring surety bonding.

Reclamation obligations at surface mines in the Powder River Basin represent temporary jobs and revenue opportunities immediately following mine closures. (Dustin Bleizeffer/WyoFile/Lighthawk)

“It’s an option for those industries to look at and maybe move to a more cash-backed bonding basis and maybe move away from either the self-bond surety market or letters-of-credit,” Wyoming Department of Environmental Quality’s Land Quality Division Administrator Kyle Wendtland said.

“It’s a win-win for everybody,” Wyoming Mining Association Executive Director Travis Deti said. “It’s getting so much more expensive. I mean, the surety companies have always charged interest and fees. And it’s not just for coal, it’s for every extraction industry.”

Reclamation assurances 

Wyoming coal companies — even publicly traded mining giants Arch Resources and Peabody Energy — are facing headwinds as U.S. utilities abandon coal-fired power generation in favor of renewable energy. Financial markets are also abandoning U.S. coal while raising the standards for operators to qualify for surety bonding and letters-of-credit. These safeguards are required to ensure mines will be properly reclaimed in the event of insolvency.

Wyoming DEQ holds about $2.7 billion in reclamation bond instruments — resources to pay for the cost of reclaiming currently active coal, trona, uranium and other mining operations in the state if operators should fail to do so, according to the agency.

“It’s a good idea that incentivizes the coal company to do that reclamation work. I wish we would have thought of it 10 years ago.”

Shannon Anderson, Powder River Basin Resource Council

In the past, Wyoming coal companies preferred “self-bonding,” essentially a promise by the operator it will complete legally required reclamation based on its good financial standing. But self-bonding proved too risky for taxpayers as coal company bankruptcies began to surge in 2016. Both the feds and Wyoming have revised rules and regulations to raise the bar for self-bonding.

In the wake of those realities, both regulatory agencies and mining operators have considered new strategies for ensuring that the cost of reclamation is guaranteed while still making bonding methods attainable.

Wyoming’s “voluntary assigned trust” proposal is a novel idea that could help keep the financial responsibility and the actual practice of reclamation on the operator of a mine rather than taxpayers or a surety company, Powder River Basin Resource Council attorney Shannon Anderson said. But she worries the option might be too late to fully benefit Wyoming and its coal industry.

“It’s a good idea that incentivizes the coal company to do that reclamation work,” Anderson said. “I wish we would have thought of it 10 years ago.”

The threat of coal bankruptcies, meantime, has not subsided, according to industry experts. 

After a series of industry bankruptcies beginning in 2016, smaller companies with limited financial resources acquired several large surface coal mines in Wyoming. A recent Sightline report indicated that as Wyoming coal customers — almost all of them U.S. utilities — continue to schedule coal power plant retirements, the impacts will not be spread evenly among coal producers in the state.

A strip mine coal pit is barely visible in this December 2019 north-facing view of the Black Thunder mine in the southern Powder River Basin. (Dustin Bleizeffer/WyoFile)

Small, private coal operators in the Powder River Basin might be more prone, according to the report.

Those increasing risks and costs to cover liabilities, along with regulatory revisions in Wyoming that tightened qualification standards for self-bonding, have helped drive a recent boost in mine reclamation work.

Rise in reclamation

The Wyoming DEQ approved an annual record 7,610 acres of “phase III” bond releases in 2020, according to data provided by the agency. That means the DEQ released full bonding for those acres, determining “the permittee has successfully completed all surface coal mining and reclamation activities (vegetation success, hydrology supports post mining land use, etc.).”

The next highest figure for phase III bond releases in the past 20 years was 4,485 acres in 2014, according to DEQ data.

Although the phase III figures include all types of surface-disturbed mining operations, coal mines account for the surge in reclamation work, according to DEQ. 

Arch Resources, for example, was relieved of $23 million in bonding as it accelerated reclamation at its Coal Creek mine south of Gillette, according to Arch. The company plans to shift from production and concurrent reclamation at Coal Creek to reclamation only, then close the mine by the end of this year.

“At [the end of third-quarter 2021], Arch’s asset retirement obligation in the Powder River Basin stood at $170.5 million, versus $189.8 million at year-end 2020,” representatives from Arch, which also owns the Black Thunder mine in northeast Wyoming, told investors recently.

Big Horn Coal Co. applied for a full phase III bond release in December for the Big Horn Coal mine in Sheridan County, representing the first major surface coal mine operation to do so in recent history. If approved, it means the state agrees the company has completed all of its required reclamation work and relieves the company of its bonding obligation.

Cattle graze on land, in 2016, that was reclaimed after mining at Peabody Energy’s Caballo coal mine in northeast Wyoming. (Dustin Bleizeffer/WyoFile)

While there’s a surge in coal mine reclamation work, the increase in final reclamation bond release applications and approvals is also attributable to the natural progression of coal mining operations, according to DEQ and the Wyoming Mining Association.

“I think it’s more of a timing issue,” Deti of the Wyoming Mining Association said.

A major portion of reclamation work is done concurrent with coal production; mines continuously backfill mined-out coal pits and employ large crews dedicated to recontouring and reseeding efforts even as the production side chases the coal seam and fills trains.

‘The reclamation doesn’t happen overnight,” Deti said. “In order to meet your [reclamation] obligations — whether it be phase I, phase II or phase III — it takes years.”

Some 195,492 acres have been disturbed by all types of surface mining in Wyoming, according to a Wyoming DEQ report. Of that, “approximately 101,321 acres have been backfilled, graded, top-soiled and seeded; or 52% of the lands disturbed have been reclaimed to the point of establishing vegetation.”

Dustin Bleizeffer

Dustin Bleizeffer is a Report for America Corps member covering energy and climate at WyoFile. He has worked as a coal miner, an oilfield mechanic, and for 22 years as a statewide reporter and editor primarily...

Leave a 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. Required fields are marked *