August 22, 2016 Read More →

Regulator Proceeds With Crackdown on Self-Bonding by Collapsing Coal Industry

Heather Richards for the Casper (Wyo.) Star-Tribune:

The Office of Surface Mining Reclamation and Enforcement announced that the agency would begin crafting a self-bonding rule, which will go through multiple comment periods, could potentially change eligibility requirements for the practice, incorporate new bonding mechanisms or institute yearly reviews of the financial health of self-bonded companies.

The coal market has changed since self-bonding was introduced and now faces instability, said Joe Pizarchik, director of the federal regulation agency, in a statement.

“This is a turbulent time of energy transformation in our country, of declining use of coal and increased use of cheaper natural gas and renewable energy” Pizarchik said. “These conditions have exposed the limitation of the current self-bonding rule and we have a responsibility to protect the public interest in keeping up with these changes.”

Wyoming is one of 10 states where companies are currently using self-bonds for the eventual cleanup of land disturbed by mining operations. After the three largest coal companies operating in-state went bankrupt over the past year, the debate over whether companies should use their assets as collateral against eventual reclamation hit a tipping point.

“If you read the history of the self-bonding regulations, the agencies just never envisioned a time when companies would be in financial collapse, in bankruptcy and still be self-bonded,” said Shannon Anderson, of the Powder River Basin Resource Council.

“The idea was, there were some financial triggers and metrics put into the regulations that would catch the companies in a time when they would still have resources to replace those bond if they needed to, and the triggers aren’t working right now.”

Meanwhile, the National Mining Association is questioning whether the federal mining authorities have a right to change self-bonding rules under federal law.

“OSM is claiming both competence and authority it doesn’t have,” the National Mining Association said in a statement. “It does not have the authority to deny states the discretion they have under current law (SMCRA) to set self-bonding conditions or decide whether to allow self-bonding.”

Pizarchik, the federal agency director, appeared to anticipate the argument that federal regulations would bypass state discretion.

“Together with state regulatory authorities that allow, or are considering allowing self-bonds as forms of financial assurance, we can write a better rule,” he wrote in a statement. “Together we can protect the public’s interest and the environment.”

Full article: Feds wade in on self-bonding debate