Powder River Basin Resource Council * Sierra Club * Wyoming Outdoor Council *
Western Organization of Resource Councils
February 14, 2018
Kyle Wendtland
Administrator, Land Quality Division
Wyoming Department of Environmental Quality
200 West 17th Street
Cheyenne, WY 82002
Via electronic mail to: kyle.wendtland@wyo.gov
Re: Informal comments on DEQ discussion draft of coal mine financial assurance regulations
Dear Administrator Wendtland,
On behalf of the Powder River Basin Resource Council, Wyoming Outdoor Council,
Sierra Club, and the Western Organization of Resource Councils, we would like to thank you for
your efforts in reforming Wyoming’s coal mine financial assurance rules. These comments are
made on behalf of our organizations and our thousands of members in Wyoming.
Our comments are informal in nature since they are outside the official comment period
under the Wyoming Administrative Procedure Act. We look forward to submitting official
comments for the administrative record and for your review when the time is appropriate. We are
submitting these informal comments at your request to help guide your staff in developing draft
regulations in advance of the official public notice and comment period. Please make this letter
publicly available pursuant to your commitment to make all letters received from mining
companies and other stakeholders public as well.
In general, we are supportive of the regulatory changes Wyoming DEQ is proposing.
There is great uncertainty about the future of coal mines nationally, and the mines in Wyoming
are no exception. Even the largest companies are no longer “too big to fail,” and taxpayers and
communities must be protected in the event of bond forfeiture. This is a critical time to ensure
that the purposes of our coal mining laws and regulations are being fulfilled to protect taxpayers
from liabilities and costs that could result from a self-bonded mining company defaulting on its
obligations. Given the thousands of acres of land disturbed by existing coal mines in Wyoming
that remains unreclaimed, and the likelihood that this area will only grow under new leases and
mine expansions, DEQ must act to ensure that there will always be adequate funds available to
complete reclamation. We also note that under both federal and state surface mining laws selfbonding is a privilege, not a right, and DEQ has significant discretion to craft regulations and to
use its regulatory authority to limit or deny self or other alternative forms of bonding.
Unfortunately, the current Wyoming regulations contain loopholes that leave the public at
risk. Following are brief comments suggesting changes to the regulations. We believe these
changes would be highly beneficial to Wyoming and should move forward to the official

 rulemaking process. For ease of tracking, we present the following comments based on the order
they are addressed in the proposed regulations.
Real property bond clarifications: While we have some concerns about bonds backed by real
property, we recognize that the risk of these bonds is quite different than that of personal
property bonds. We support the DEQ’s proposal to clarify that real property must be located
outside the permit boundary. This will ensure that mines are not backing bonds with their own
mining properties. We would encourage DEQ to further clarify that the property should be
located outside the boundary of any of the company’s or parent company’s permits.
Eliminating personal property collateral bonds: We support DEQ’s proposal to eliminate the
use of bonds backed by personal property, such as mining equipment and machinery. Once a
company is in bond forfeiture it is highly likely that the value of their mining equipment will be
at liquidation levels, much less than the recorded “fair market value” of such equipment.
Additionally, the economic conditions most likely to drive a company into bankruptcy will
impact the entire industry, thus destroying or significantly limiting the market for mining
equipment. We expect that the past decade of declining mine production in the PRB has
produced a surplus of mining equipment at active mines. Therefore, we do not believe there
would be a robust market for used mining equipment held by the state as bond collateral.
Inclusion of off-balance-sheet liabilities: We support DEQ’s proposed language adding in offbalance-sheet liabilities to the definition of “liabilities” under the rules. Coal companies maintain
a variety of liabilities off their balance sheets. These liabilities are not covered in the current
definition and should be included.
Limiting self-bonding to mines with longer life: We do not believe self-bonding is appropriate
for any mine given the current and projected state of the industry. That said, if DEQ declines to
eliminate self-bonding entirely, we agree that self-bonding should be limited to operations where
the remaining “life of mine” exceeds 10 years. Mines with limited reserves present greater
regulatory risk, and it makes sense to limit self-bonding to mines with greater reserves.
Limiting self-bonding to a percentage of the required bond amount: If DEQ declines to
eliminate self-bonding, we agree that the portion of a bond that can be covered by self-bonds
should be limited. This will reduce the regulatory risk and will ensure that at least a portion of
the bond amount will be immediately available to regulators in the case of forfeiture. We also
support DEQ’s proposal to further limit self-bonding by companies with lower bond ratings.
Demonstrated financial solvency: We support DEQ’s proposed use of bond ratings to
determine eligibility for self-bonding. As recent history clearly demonstrates, the financial
fitness metrics in the current regulations do not properly ensure that only healthy, stable
companies with low risk of bankruptcy can self-bond. Bond ratings recognize an operator’s
history of financial solvency but also provide a forward-looking and more “real-time” view of a
company’s financial status. We believe switching to bond ratings or other financial ratings issued
by third-party entities will allow regulators to identify problems and replace self-bonds before it
is too late (e.g. the company is already in bankruptcy).

 Requiring backing by the parent entity: We support DEQ’s proposal to require that self-bonds
be guaranteed by ultimate parent entities, rather than midstream entities. As you know, this
would have helped to address the situation the state faced during the recent bankruptcies of Arch
and Peabody. One proposed change is to use the term “ultimate parent entity guarantor” as
opposed to “parent corporate guarantor” since sometimes parent companies are not corporations.
“Ultimate parent entity” is also consistent with OSMRE’s ownership and control regulations that
already use the phrase. See, e.g. 30 C.F.R. § 778.11(b).
Guarantor liability under the indemnity agreement: In the event that the operator fails to
complete the reclamation plan, the guarantor must provide funds to complete reclamation. DEQ
proposes to lower the guarantor’s maximum liability from the “bond amount” to the “actual
reclamation costs.” We do not oppose this change, but would prefer that the term “actual
reclamation costs” is either defined or clarified to explicitly include both the direct costs of
reclamation, such as earthmoving, re-vegetation, etc., and the indirect costs, such as engineering
design of the reclamation work, mobilization/demobilization, contractor overhead and profit, the
costs to DEQ to oversee and administer the contract and monitor the success of reclamation, and
contingencies. Absent this clarification, a bond guarantor could argue that its obligation to fund
reclamation solely encompasses the costs of actual reclamation operations, and does not
encompass indirect costs such as those outlined above.
Deadline to substitute self-bonds: We support a shorter period of time to substitute self-bonds
following a demand by DEQ. The current regulations allow up to ninety days to replace bonds
once a bond substitution demand is issued from DEQ. This time period is unnecessarily long and
does not properly balance the need of the regulator to manage risk with the need for the company
to obtain financing necessary for bond replacement. We suggest closing this loophole by
requiring bond replacement within thirty days.
Thank you for your timely and important review of Wyoming’s financial assurance
regulations.
Sincerely,
Shannon Anderson
Staff Attorney, Powder River Basin Resource Council
Connie Wilbert
Director, Sierra Club Wyoming Chapter
Mary Flanderka
Policy Advocate, Wyoming Outdoor Council
Bob LeResche
Chair, Western Organization of Resource Councils Coal & Climate Team
CC: Carol Bilbrough, Kimber Wichmann, Andrew Kuhlmann