The state of Wyoming and bankrupt coal giant Alpha Natural Resources have reached an agreement over the company's reclamation bonding obligations. But as it covers just a small fraction of what the state estimates it would cost to clean up Alpha's mines.
The state projects it would cost $411 million dollars at most for Alpha to clean up its coal mines in Wyoming. Earlier this year, the Department of Environmental Quality asked the company to pay up on that obligation, in the form of a bond. But when Alpha declared bankruptcy in August, it still hadn't put up the money.
The agreement announced by the governor’s office today makes $61 million dollars of the total a so-called super priority claim, meaning it will be paid back before other debts Alpha owes. But the rest, $350 million, is a lower creditor priority so it will take a back seat to other creditor's claims.
Sherrill Shaffer, a professor of banking and financial services at the University of Wyoming, believes it is a compromise.
“Given that some of these debts are going to end up on the chopping block under the bankruptcy proceeding, we coulda lost a whole $411 million, that’s really the worst possible outcome,” Shaffer said.
The bankruptcy court has to approve the agreement before it can go into effect.