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Wyoming, Arch Coal reach bankruptcy bonding deal

CHEYENNE, Wyo. (AP) — Wyoming regulators have reached a deal with Arch Coal to accept up to $75 million in place of the company’s $486 million in bonding obligations in the state while the company goes through Chapter 11 bankruptcy.

Among Arch’s two active mines in Wyoming is Black Thunder, one of the world’s largest coal complexes. Bonding helps ensure those mines could be filled in and restored to a natural state should they ever close.

For years, an ongoing agreement between Arch and Wyoming regulators called self-bonding has allowed the company to demonstrate it could cover potential reclamation costs in the state. In exchange, Arch hasn’t had to post bond for those facilities.

Under an agreement filed Tuesday in Missouri bankruptcy court, Wyoming would be a priority creditor to collect on at least some of Arch’s self-bonding obligations if necessary.

St. Louis-based Arch filed for bankruptcy Jan. 11. As of Wednesday, the judge in the bankruptcy case hadn’t approved the bonding agreement.

Wyoming officials and Alpha Natural Resources reached a similar agreement last year after the Bristol, Virginia-based company filed for Chapter 11 bankruptcy. That agreement made Wyoming a priority creditor for $62 million of $411 million in self-bonding.

Arch and Alpha each operate two large open-pit mines in the Powder River Basin, the nation’s top coal-producing region. Statewide, coal mine self-bonding obligations top $2.1 billion.

Environmentalists say such agreements risk leaving taxpayers responsible for mine cleanup costs. Wyoming is engaged in “cynical collusion” with Arch to reduce the company’s bonding, said Bob LeResche, chairman of the Powder River Basin Resource Council landowner environmental group.

“Now is not the time to roll the dice with taxpayer money on another bankrupt coal company. Bankruptcy should never be used as a haven for a huge corporation to escape its obligations to clean up its mines,” LeResche said in a statement Wednesday.

The agreement between Arch and the Wyoming Department of Environmental Quality helps to ensure the company’s mines stay open and for routine, ongoing reclamation to continue, DEQ spokesman Keith Guille said.

“Being able to enter into this agreement is positive for all of Wyoming, and its taxpayers, and the environment,” Guille said.

Lately, however, federal regulators are scrutinizing Wyoming’s self-bonding agreements with coal companies. The Office of Surface Mining Reclamation and Enforcement has given the DEQ until Friday to provide more information about Alpha’s self-bonding and until Feb. 22 to provide more information about Arch’s self-bonding.

OSMRE spokesman Christopher Holmes declined to comment, citing agency policy not to comment on pending litigation

Wyoming reached its bankruptcy court agreement with Alpha after the state last May told the company to replace its self-bonding with conventional bonds. Alpha may be violating Wyoming regulations by continuing to mine without posting sufficient bond, OSMRE told the DEQ in a Jan. 21 letter.

Arch’s bankruptcy filing and a complaint filed by the Powder River Basin Resource Council prompted OSMRE to ask DEQ to further explain Arch’s self-bonding.

In related news, Arch Coal files for Chapter 11 bankruptcy protection.

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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