In January, the federal government notified the Wyoming Department of Environmental Quality that bankrupt coal company Arch Coal could be in violation of mining regulations. On Monday, DEQ responded to the notice, writing that it has already dealt with the alleged violation which relates to Arch Coal's reclamation bonding.

Regulators cited an agreement that would require Arch to put aside some funds for future coal mine clean up as one of the steps it has taken to ensure the company's reclamation obligations are covered. 

DEQ also noted in its letter that another part of that agreement is a commitment from Arch, upon exiting bankruptcy, that the company will post new financial assurances to cover the full amount of its reclamation obligations in Wyoming.

This agreement still has to be approved by the bankruptcy court.

On the last page of of DEQ's response, regulator Kyle Wendtland wrote: "The dramatic decline in Arch's financial condition... creates a series of challenges for both DEQ and OSMRE....The resolution, while not ideal in every respect was lawful, reasonable."