Cloud PeakEnergy Inc. reported it will move away from the controversialpractice of self-bonding its coal mining reclamation liabilities.

Cloud Peak President and CEO Colin Marshall said on an April28 earnings call thatthe company is in discussion with surety providers to increase third-partybonding. The company has also submitted applications to the Wyoming Departmentof Environmental Quality to reduce its self-bonding requirements.

"When these things are complete, we expect to be ableto exit self-bonding with Wyoming," Marshall said.

Cloud Peak is seeking recognition for reclamation that isalready done and changing assumptions based on lower fuel prices. By increasingits third-party bonding above $400 million and obtaining those adjustments,Marshall said the company should be able to exit the self-bonding program.

Federal mining laws require assurances that mine closure andreclamation costs will be covered. Regulations allow certain qualifyingcompanies in some states to self-bond those obligations by assuring their ownobligations based on their financial health.

Recent coal company bankruptcies,including filingsfrom those that qualifiedfor self-bonding in multiple states, has prompted concern from regulators and other about the of such programs.Cloud Peak noted that "regulatory uncertainties" around such programsprompted it to voluntarily move away from self-bonding now.

According to Cloud Peak's From 10-Q filed April 28, thecompany is self-bonded for $190 million and has $427.0 million of surety bondsoutstanding as of March 31. Wyoming recently approved Cloud Peak to continuethe self-bonding program.

"While we are pleased that our consolidated financialposition allows us tomeet the requirement for self-bonding with the state of Wyoming, we areproactively working to address the ongoing regulatory uncertainties regardingself-bonding programs by seeking to voluntarily transition fully to third-partysurety bonds," said Executive Vice President and CFO Heath Hill. "Weare in discussions with surety bond providers to potentially increase thebonding capacity by offering approximately 15% collateral in the form ofletters of credit under our credit agreement."