Federal Government Recommends States Halt Self-Bonding

Aug 10, 2016

A shovel moves overburden at the Eagle Butte Coal mine near Gillette, Wyoming.
Credit Stephanie Joyce / Wyoming Public Media

With the downturn in the coal market, the federal government is encouraging states to reconsider whether to allow coal companies to self-bond. Self-bonding allows coal companies to avoid putting up cash or other assurances to guarantee their cleanup obligations.

The practice has come under scrutiny in the last year as many of the nation’s largest coal companies have declared bankruptcy with more than $2 billion in self-bonded cleanup on their books.

The federal government made its recommendations in a policy advisory issued Tuesday. It suggests that until coal markets stabilize, states should not accept new self-bonds from companies, and should review whether companies that already have self-bonds are still eligible. But the advisory stops short of calling for the elimination of self-bonding as a way to guarantee cleanup.

In an interview, the director of the federal Office of Surface Mining Reclamation and Enforcement explained that because self-bonding is authorized under the 1977 Surface Mining Control and Reclamation Act, it can only be banned by Congress. Even so, the policy guidance emphasizes that while states may accept self-bonding, they are not required to do so.

"State regulators have the primary responsibility for implementing the law, and they have the discretion whether or not to accept a self-bond from an applicant," said Joe Pizarchik.

A Wyoming Department of Environmental Quality spokesman declined to comment on the guidance before reviewing it, but said the department has been studying the implications of making changes to the state’s self-bonding program.

Colorado and Virginia have already stopped accepting new self-bonds to guarantee cleanup.