U.S. Government Accountability Office Recommends Eliminating Self-Bonding

Apr 6, 2018

Amount of Financial Assurances Held in 2017, by Type, for Reclaiming Coal Mines in States and on Indian Tribal Lands with Active Coal Mining
Credit U.S. Government Accountability Office

The U.S. Government Accountability Office (GAO) is recommending Congress eliminate self-bonding. It's a method used by coal companies to guarantee clean-up costs without putting money down.

The problems with self-bonding were highlighted when several of the nation’s largest coal companies went bankrupt in 2015 and 2016. The huge bill leftover for clean-up costs nearly fell on taxpayer shoulders. Wyoming has been looking to reform the practice since 2013, with a more concrete proposal released in 2017.

Overall, the GAO outlined why it thought self-bonding was riskier today than when it began. That included more complex financial regulations which make a company’s health harder to gauge. The report also mentioned there are more secure methods to ensure reclamation and that it’s not more difficult for companies to obtain alternative assurances.

Powder River Basin Resource Council Attorney Shannon Anderson said she hopes Congress takes the recommendation seriously. 

"It’s important to have the right bonding to make sure the lands get reclaimed and that taxpayers aren’t on the hook,” she said. 

According to the Western Organization of Resource Councils, there is 78 percent less self-bonding in 2018 than in 2015. Anderson said that should be incentive to eliminate the method. 

“It’s actually a really good time to get rid of self-bonding altogether when there’s a relatively little amount of it left,” she said.

An administrator for the Department of Environmental Quality said no bonding option is 100 percent secure. A representative of Rocky Mountain Power, which owns a mine in Wyoming, said reforms would cost customers through increased rates.

The GAO’s report originally arose through an audit from U.S. Sen. Maria Cantwell (D-WA) who sponsored a bill, the Coal Cleanup Taxpayer Protection Act, calling for an end to self-bonding. Congress would have to amend the Surface Mining Control and Reclamation Act (SMCRA) to take action on self-bonding.