Wyoming DEQ Proposes Self-Bonding Limits

Mar 13, 2018

DEQ Notice of Public Meeting
Credit Department of Environmental Quality

The Wyoming Department of Environmental Quality has released a final rule proposal that would change how coal companies self-bond. That’s when a company uses an IOU to guarantee clean-up costs based on its financial strength. 

The recent coal bankruptcies highlighted the issues with self-bonding as companies were nearly unable to pay massive reclamation costs. Kyle Wendtland, DEQ Land Quality Administrator, said the rule-updating process has been in motion since before that. In 2013, Wendtland said, began an effort to align the rules with today's regulatory system.

"A lot of structural things that have happened in the financial world." Wendtland said the Dodd-Frank Act has for example, "dictated how companies have become structured and what they look like today."

Since the 1980s, Wyoming has allowed 100 percent self-bonding. But the proposed rules would reduce that to a maximum of 75 percent. Wendtland said that will force companies to diversify their methods for assuring the costs of mine reclamation. 

“In your own financial investing, you don’t put everything in one financial instrument, most people have a variety of mutual funds and other investments for that very reason to spread that risk,” he said.

There are several other changes including holding umbrella companies responsible for self-bonding rather than subsidiaries and moving past outdated financial assessments. Public comment is open until March 28 when an advisory board will meet to discuss the revisions and either approve, deny, or send them back for review.