(Casper Star Tribune, July 8) – A federal bankruptcy judge approved Alpha Natural Resources’ restructuring plan Wednesday, confirming a proposal that will split the mining firm into two companies and replace all its unsecured reclamation obligations in Wyoming.
The approval represents a victory both for the bankrupt coal company and environmentalists, who had long warned about the dangers posed by its form of cleanup insurance. The plan also calls for $13 million to fund 4,580 former employees’ health care benefits.
“Confirmation of Alpha’s plan represents the final court milestone in a complex, one-year restructuring process,” Alpha Chairman and CEO Kevin Crutchfield said in a statement.
Alpha’s marginal mines in Appalachia will remain with the Bristol, Virginia-based company. Its best properties, including its two Wyoming mines, will be sold to Contura Energy Inc., a new company backed by its senior lenders.
Those mines will no longer be allowed to use self-bonds, as unsecured reclamation bonds are known. Alpha had $411 million in self-bonds in Wyoming. Under a settlement negotiated with the Department of the Interior, Alpha will replace its self-bonds with secured financing.
The agreement was cheered by conservation and environmental groups, who applauded the Interior for intervening aggressively. Interior officials had threatened to block the transfer of federal mining leases unless the company agreed to replace its self-bonds with secured financing.
“I think it is a victory in the sense we seem to get to the end of the situation here,” said Shannon Anderson, a lawyer at the Powder River Basin Resource Council, a landowners group in Sheridan.
The agreement should set an important precedent in the bankruptcy cases of both Arch Coal and Peabody Energy, which have a combined $1.2 billion in self-bonds in Wyoming.
Questions nevertheless remain. State regulators will determine the amount of the company’s reclamation obligations.
The Wyoming Department of Environmental Quality has instituted a series of policies in recent months aimed at reducing estimated bonding costs.
Wyoming was not party to Alpha’s settlement with federal regulators. A DEQ spokesman could not immediately be reached for comment.
The Wyoming Mining Association, an industry group, declined to comment on the deal.
Alpha had initially sought to eliminate retiree benefits, arguing the move would save the company $3 million annually and remove a $125 million liability from its books.
The restructuring plan calls for the creation of a voluntary employee beneficiary association. Contura will provide $13 million to be paid over a five-year period: $3 million following the company’s emergence from bankruptcy, $3 million in 2017, $3.5 million in 2018, $2.5 million in 2019 and $1 million in 2020.
Of the 4,580 employees, 366 worked for Alpha in Wyoming.
