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OSMRE: Wyoming deal with Alpha over reclamation falls short

Federal mining officials wrote that Alpha Natural Resources Inc. is in violation of Wyoming'spermitting program and the Wyoming Department of Environmental Quality has not takenappropriate action to remedy the violation.

A letter to Kyle Wendtland, administrator for the land qualitydivision at WYDEQ, from Jeffrey Fleischman, chief of the U.S. Office of SurfaceMining Reclamation and Enforcement's Denver Field Division, said OSMRE found WYDEQ'sresponse to a violation to be "arbitrary, capricious, or an abuse of discretion."In the letter, Fleischman said Wyoming was irrational in its interpretation of theprogram, did not adhere to procedure, behaved inconsistently with applicable lawand acted without a rational basis after proper evaluation of relevant criteria.

A 10-day notice sent to WYDEQ on Jan. 21 said OSMRE believedAlpha was in violation of the state's bonding program. OSMRE said that it believedbonds used to reclaim land and account for other environmental liabilities had fallenbelow the amount necessary to assure the operator could comply with reclamationlaws.

On May 26, 2015, WYDEQ issueda determination that Alpha was no longer qualified to self-bond based on its financial status.

Alpha has two large surface mines in Wyoming, Belle Ayr and EagleButte. Alpha's Wyoming operations are among some of the most productive coal minesin the U.S., requiring substitute bonds or collateral of approximately $411 millionto continue mining. WYDEQ sought and obtained a stay of its substitution order afterAlpha voluntarily filedfor bankruptcy protection.

OSMRE was critical of the settlement with Alpha in which WYDEQreceived only a superpriority bankruptcyclaim of $61 million over and above administrative expenses instead of the $411million estimated bond liability. Noting that it has been 13 months since WYDEQdetermined Alpha did not qualify for self-bonding,OSMRE said WYDEQ's actions allowing Alpha to continue to mine without adequate bond"are not appropriate."

"At base, WYDEQ has given Alpha a 'free-pass' from regulatorycompliance by allowing the continuance of mining activities for a lengthy periodwithout adequate bond, and without any interim measures towards abating or otherwisecorrecting the violation," Fleischman wrote.

Alpha's reorganization plan includes splitting its profitable operations from its non-profitingoperations that will focus on just reclamation.Alpha's Wyoming mines are included in a new entity comprised of profitable operationsbeing called Contura Energy and will be required to be bonded after the reorganization.

In a statement to the Casper Star-Tribune, Wyoming Gov. MattMead called the federal action "unwarranted" and said if the state followedOSMRE's lead it would result in shutting down coal mines and putting miners outof work.

OSMRE and the WYDEQ declined a request to comment further onthe letter.