| CHICAGO, Sept 12
CHICAGO, Sept 12 U.S. coal miner Arch Coal
has agreed to set aside collateral to cover future
mine cleanup costs as part of its bankruptcy reorganization
plan, according to a court filing, ending its controversial use
For decades the largest U.S. coal companies have used a
federal subsidy known as "self-bonding," which exempts companies
from posting bonds or other securities to cover the cost of
returning mined land to its natural state, as required by law.
Arch had $485.5 million in self-bonds in Wyoming when it
filed for bankruptcy protection in January, saddled with $6
billion of debt and a deep slump in the coal sector.
Under a reorganization plan set for a confirmation trial in
U.S. Bankruptcy Court in St. Louis on Tuesday, Arch must replace
all of its self-bonds within 15 days of its bankruptcy exit plan
becoming effective, a court filing by the company showed on
Environmental groups that have waged legal battles to hold
coal companies accountable for their cleanup obligations
welcomed the news.
"Better financial assurance will protect taxpayers and will
ensure that the mining company remains responsible for any
clean-up costs for its large Wyoming coal mines," said Shannon
Anderson, a lawyer for Powder River Basin Resource Council, a
Wyoming conservation group.
Arch operates one of the largest U.S. mines, Black Thunder,
in the coal-rich Powder River Basin.
Arch had initially resisted replacing its self-bonds,
arguing in court filings that providing other forms of
guarantees would eat into its delicate liquidity. Coal
businesses have suffered from falling demand in China and
competition from lower natural gas prices.
"Arch has demonstrated it is possible to phase out
self-bonding while keeping mines going, and we hope other
companies, including Peabody, follow their example," Anderson
U.S. coal watchdog Office of Surface Mining and Reclamation
Enforcement has asked state regulators to crack down on
self-bonding following Chapter 11 filings by some of the largest
U.S. coal companies.
Peabody Energy Corp, Alpha Natural Resources and
Arch had a combined $2.2 billion in self-bonding liabilities
when they filed for bankruptcy over the past 13 months.
Peabody, which filed for bankruptcy in April with $10
billion of debt, has $1.14 billion of self-bonds in four states.
In July, Alpha agreed to replace its self-bonds in Wyoming
with other guarantees as part of a complex deal to exit
bankruptcy but will continue to cover reclamation at former mine
sites in West Virginia with self-bonds.
(Reporting by Tracy Rucinski; Editing by Cynthia Osterman)