OSMRE to take comment on self-bonding petition related to coal companies

The U.S. Office of Surface Mining Reclamation and Enforcement (OSMRE) will be seeking comments on a petition by WildEarth Guardians under the Surface Mining Control and Reclamation Act requesting amendment of self-bonding regulations to ensure that companies with a history of financial insolvency, and their subsidiaries, are not allowed to self-bond coal mining operations.

This has come up lately as several major coal producers, including Peabody Energy, Alpha Natural Resources and Arch Coal, have sought Chapter 11 bankruptcy protection. Some states, like Wyoming, have allowed companies to self-bond their post-mining reclamation obligations at mine sites. But, since the bankrupt companies don’t have the deep pockets they used to have, this practice has become more controversial.

OSMRE will post notice about this petition in the May 20 Federal Register and will take comment on it for 30 days after that.

On March 3, the agency received from WildEarth Guardians a petition for rulemaking requesting that OSMRE amend its self-bonding regulations to ensure that companies with a history of financial insolvency, and their subsidiary companies, are not allowed to self-bond coal mining operations. The petition claims that current rules allow regulatory authorities to accept self-bond guarantees from subsidiary companies that are technically insolvent due to the financial status of their parent corporations, potentially shifting the financial burden for substantial mine reclamation costs to taxpayers in the event the companies do not have the financial resources to complete their mine reclamation obligations. That is a reference to OSMRE’s Abandoned Mine Lands program, which is underfunded in terms of timely reclamation of old mine sites, let alone new ones.

In its petition, WildEarth Guardians provides draft regulatory language that it alleges will ensure that any entity, including non-parent corporate guarantors, will be subject to appropriate financial scrutiny before being allowed to self-bond. Specifically, WildEarth Guardians requests that OSMRE revise its self-bonding regulations to define ultimate parent corporation, limit the total amount of present and proposed self-bonds to not exceed 25% of the ultimate parent corporation’s tangible net worth in the United States, and require that both the self-bonding applicant and its parent corporation meet any self-bonding financial conditions, including the requirement that neither have filed for bankruptcy in the last five years.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.