A coal mine near Gillette, Wyoming. Several mining companies in the Powder River Basin face bankruptcy, calling into question reclamation liabilities. (Flickr Creative Commons photo by Greg Goebel)
RT Cox

(Opinion) — The federal strip mine bill enacted in 1977, despite decades of opposition, imposes a hefty fee on coal mining for the purpose of reclaiming orphaned mines. Hundreds of companies had walked away from mines in West Virginia, Kentucky, Illinois and other states, leaving polluted water and ruined land. The Abandoned Mined Land fund was established to provide state and federal agencies with money to clean up these messes.

The sheer bulk of mining coal in Wyoming since 1977 has generated hundreds of millions of dollars that have not generally been needed for coal mine reclamation in Wyoming. AML money was initially used in Wyoming to extinguish underground coal fires, plug uranium test holes and the like, then was diverted to purposes having nothing to do with reclamation.

Congress has recently acted to send a big pile of this AML money to Wyoming. Now we have to think about actually using this money for the purpose for which it is collected.  

Environmental groups and others opposed to burning fossil fuels have caused some unanticipated consequences through their relentless pressure on the coal industry. EPA’s multi-faceted attempts to impose carbon emission controls on coal power plants has effectively created enough uncertainty to completely eliminate the ability of utilities to borrow large sums to build new coal plants. As old plants are being retired, the capacity needed to meet demands is being replaced with natural gas and, to a limited extent, wind and solar power, in large part because no one can finance new coal plants. Eroded demand has sharply driven down the stock prices of coal-mining companies. As the values of the companies plummet, their ability to use their stock value as a guarantor of financial ability to reclaim thousands of acres of mined Wyoming land has collapsed.  

Wyoming’s Department of Environmental Quality reacted to Alpha Natural Resource’s declining stock values by canceling the company’s self-bonding status and demanding $400 million worth of bonding. Of course Alpha cannot possibly meet this demand. The same is likely true of several other coal-mining corporations. What insurance company is going to sell $400 million worth of bonds and assume the risk of expensive reclamation? Alpha filed for Chapter 11 bankruptcy protection, surely to be followed by others. DEQ’s demands for money for reclamation are unsecured debts. Unsecured debts are not always treated favorably in bankruptcy courts. DEQ will need shrewd negotiators to attempt to obtain some assurance that the companies will be able to reclaim thousands of acres of strip-mined land after filing for bankruptcy.

Meanwhile Wyoming’s governor and Legislature are under pressure to divert AML money to local governments and the University of Wyoming, as has been frequently done in the past. Maybe they need to save this money for reclamation instead, so we don’t end up looking like parts of West Virginia.

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Flickr Creative Commons photo by Greg Goebel.

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  1. It seems that wisdom is always outstripped by greed and the desire for money. AML money should be used for just that. Thousands of abandoned or orphaned wells now exist across the state because DEQ did not require adequate bonding. Seems they never learn. That is precisely why local organizations such as the Powder River Council developed…our governments inability to refrain from spending money on needless projects, and their inability to protect the land and citizens.

    Lee Bailey

  2. RT’s suggestion has more merit by the week – When Ed Herschler and I sponsored the bipartisan first surface mine reclamation law west of the Mississippi and when Wyoming became the first state to have primacy over reclamation under the federal law, we meant it when we said that the land would be reclaimed – now the cascading financial crisis in the coal, oil, and gas industries and questions about the adequacy of the reclamation bonds puts proper reclamation in jeopardy – the legislature should not miss this chance to earmark the AML money exclusively for reclamation of coal, oil, and gas activities not reclaimed after all other sources are exhausted, including vigorous efforts to enforce bond collection.
    Nels Smith
    Sundance

  3. I agree With you (R.T.) 100%. Imagine paying taxes for a specific purpose and the money actually being used for that purpose. Amazing!

    Jimmy Goolsby

  4. Originally the AML money was targeted for Rock Springs, because of damage done here by collapsing mines. Then the purpose was to mitigate mine damage state wide. Colorado Mines helped us nicely here with our problems–spending money at UW under the guise of changing the name of a building is one reason a lid was put on the money in the first place. Mine mitigation is the need, no more palaces around the state.

    Frank Prevedel, Rock Springs

  5. Recall, the Summitville Mine disaster in COLO?

    It was such a disaster it imposed costs of over $ 200 million on the U S , Federal Government, Uncle Sammy. The owners of Summitville, mine, and gamers in Canada, played the courts, and insurance rackets, where they made money off the disaster, and the Federal Government got the shaft.
    Really, look into the full history on that, since, the U of Wyo has such a splendid history Department on matters.

    Jim Hagood

  6. Well said, RT. AML money needs to be used for reclamation, as originally envisioned. If it is diverted to some other use, Wyoming may not get any more of it. We already have a huge shortfall in oil and gas bonding for orphan wells, and it looks like we are well on the way to a huge shortfall in coal mine reclamation bonding as well.

    Hal Corbett

  7. The author took the words right off my page. Cox is absolutely correct that any influx in AML funds needs to stay within the boundary of mitigating our declining fossil fuel industry in Wyoming. The Governor and the Legislature need to show restraint towards being tempted by AML largesse . Can they , in this budget climate? We’ll see. I have doubts. I feel some accounting legerdemain is coming at the Lej this winter . The much ballyhooed fiscal conservatism of our Republican-led Legislature will be put to the test.

    Here’s why I think the Lej will flunk that test. One block from my home in downtown Cody is a new public park . Canal Park as it is called is built on the site of a former nickel and dime sand and gravel operation , one so small it could fit in your own back yard. It was one the edge of Taggart Construction’s equipment yard during their road construction years in the 1940’s 50’s and ’60’s. In the several decades it was utilized, I doubt that even $ 20,000 worth of sand and concrete aggregate were ” mined” from that tiny “minesite”.

    The wife of a prominent oilman instigated a drive to create a new city park. What was once a tiny sand pit is now a landscaped and lushly planted recreation area, Canal Park. It was done with about $ 1 million in AML funds for the initial reclamation and landscape repurposing. Private funds were used to complete the infrastructure : trees, trails, and exhibitry . Marathon Oil paid to build a small amphiteater into the hillside , with no amenities beyond concrete benches. This new Canal Park is about ten times the size of the old sand and gravel pit I played in as a kid. It is all adjacent to the City of Cody’s recreation center complex. That Rec Center and Canal Park were gifted to the City of Cody , which now maintains them at an annual expense ( shortfall) of $ 750,000

    While the AML funding pool was derived entirely from coal mines, there is not a coal mine within 20 miles of Canal Park in Cody , and those very small hardscrabble family mines were reclaimed decades ago. It really is a stretch to accept Canal Park as being an example of an AML reclamation project as intended by the enabling legislation. But there you have it. A well-greased grant application pushed by a prominent Petrocrat on behalf of his spousal unit’s pet project.

    Wyoming has some serious mine and energy development mitigation staring at us. Giant strip mines imploding , thousands of abandoned coalbed methane wells, shut in oil wells and the likes, which need our attention. That particular Petrocrat’s old oil refinery site across the river from Cody is very nearly an EPA Superfund site that is lying fallow. Just sayin’.

    Let’s hope the Legislature does not divert even one dollar of the AML windfall to any more Canal Parks or even state and local government props unless and until our festering mineral industry mess is tended to. The 2016 Lej budget session will be interesting , to say the least.

    Dewey Vanderhoff