As previously discussed, the decline of Big Coal, though generally a positive development in humankind’s painful stumble to adulthood, poses a number of legal, financial and environmental challenges, many resulting from the industry-specific practice of “self-bonding,” pledging corporate assets to be used for land remediation instead of more traditional insurance.
In yesterday’s Casper Star-Tribune, Heather Richards reports that, in a departure from usual practice, bankrupt Arch Coal has agreed to a restructuring which relies on traditional insurance policies to guarantee cleanup of its retired mines.
The plan moves the coal giant away from self-bonding, a contentious practice that allows companies to forgo traditional insurance for cleanup, backing up their promise to pay for reclamation with their financial strength.
The restructuring plan signals a win for both sides of the self-bonding debate in Wyoming. Arch will emerge from crippling debt with a healthy balance sheet in a coal market that is showing signs of stabilizing. Meanwhile, environmentalists view the plan as another step toward ending self-bonding in the state.
Arch will most certainly have to monitored for environmental regulation compliance as the company retires more facilities, but seeing a major player eschew the dubious practice of self-bonding is a hopeful development as the industry grapples with the reality of its decline.