Regulators to revise coal self-bonding rules: UpdateOREANDA-NEWS. August 17, 2016. The US Interior Department said it intends to adopt stricter regulations on self-bonding for coal companies after critics complained taxpayers could get stuck with the bill to clean up mines.

The proposed changes "will provide better tools to ensure only financially stable companies are able to self-bond," Joe Pizarchik, the director of the Interior Department's Office of Surface Mining Reclamation and Enforcement (OSMRE), said. "State and federal regulators have a legal and a moral obligation to ensure that the land is restored and that the people in coal country are protected."

States typically run self-bonding programs, which allow coal companies to avoid putting up collateral for future environmental cleanup costs as long as they meet certain financial criteria. OSMRE sets the minimum qualifications, but the coal industry's decline — including a recent spate of bankruptcies — has "exposed the limitations" of current rules, Pizarchik said. The process to change these federal regulations usually takes at least two years.

The coal industry generally objects to federal intervention in this process.

OSMRE "does not have the authority to deny states the discretion they have under current law" to oversee these programs, the National Mining Association said today. The agency "is claiming both competence and authority that it does not have."

Senator Maria Cantwell (D-Washington) applauded OSMRE's decision, calling it "another critical step" in protecting taxpayers and the environment "from bankrupt coal companies." Cantwell in June sponsored a bill that would prohibit state and federal regulators from issuing new self-bonds.

States including Wyoming and West Virginia have already begun to review their self-bonding standards.

"Wyoming believes that self-bonding still has a place," Department of Environmental Quality (DEQ) land quality division administrator Kyle Wendtland said. Because each financial instrument has its own risks, Wendtland advocates for moving toward a "more diverse portfolio" to assure reclamation obligations are met. He hopes that OSMRE follows through on its promise to engage states in the development of the proposed changes.

But environmental groups are skeptical of states' commitment to self-bonding reform.

"The states are not capable of dealing with this issue," WildEarth Guardians climate and energy program director Jeremy Nichols said, citing Wyoming letting Peabody Energy maintain its self-bonding status despite being under Chapter 11 protection as an example. "They are so used to just doing the bidding of the coal industry."

OSMRE's decision to initiate the rulemaking process comes in response to a petition by the WildEarth Guardians asking the agency to prevent coal companies and their subsidiaries with a history of financial insolvency from qualifying for self-bonding. OSMRE received more than 117,000 comments on the petition during a 60-day period, Pizarchik said.

OSMRE called the WildEarth Guardians' suggestions "a starting point," saying that the agency "will explore revision that will go beyond the language suggested by the petitioners."

Goals for the new regulations include making eligibility criteria for self-bonding more forward-looking, rather than being based solely on past performance; establishing third-party review of the financial health of coal companies; diversifying the financial assurance profiles of each mine; and enhancing regulators' abilities to obtain replacements for self-bonds when companies no longer qualify.