Coal bankruptcy plan approved amid bonding uncertainty

(Ryan Dorgan | The Casper Star-Tribune via AP, file) In this Jan. 9, 2014 photo, rail cars are filled with coal and sprayed with a topper agent to suppress dust at Cloud Peak Energy's Antelope Mine north of Douglas, Wyo.

Cheyenne, Wyo. • A judge approved a bankruptcy reorganization for one of the biggest U.S. coal companies Thursday amid ongoing uncertainty about how its mines will be bonded in the long term.

Gillette-based Cloud Peak filed for bankruptcy in May. In 2018, the company was the third-highest-producing coal producer in the U.S., after Peabody Energy and Arch Coal, both based in St. Louis.

The bankruptcy was part of what’s been a tumultuous year for the Powder River Basin coal industry. Milton, West Virginia-based Blackjewel’s bankruptcy in July substantially shut down two major Wyoming mines for four months. Peabody and Arch meanwhile agreed to merge their basin operations.

Cloud Peak's Chapter 11 reorganization, approved by U.S. Bankruptcy Judge Kevin Gross in Delaware, includes the sale of its Antelope and Cordero Rojo mines in Wyoming and Spring Creek mine in Montana.

New Mexico-based Navajo Transitional Energy Co. agreed to pay $15.7 million for the mines while assuming certain Cloud Peak debts. The sale closed in October.

In November, the Navajo Nation refused to provide financial backing for NTEC, a tribal company, to secure some $400 million in bonds for the mines. The bonds would ensure cleanup could occur if the mines ever closed.

The mines remain bonded through Cloud Peak though NTEC would need to secure its own bonding before Wyoming and Montana officials agree to Cloud Peak's state mining permits for the three mines.

The two states also want NTEC to waive sovereign immunity — immunity, as a tribe, from any lawsuits filed that seek to enforce environmental laws — before transferring the Cloud Peak state permits to NTEC.

Lack of long-term certainty about the mines' bonding concerns the Powder River Basin Resource Council, a landowner advocacy group.

“The technical end of bankruptcy is far from the end of problems for Cloud Peak Energy, Wyoming, and Montana," resource council board member Bob LeResche said in a release.

“Notably, until NTEC provides financial assurances and waives sovereign immunity to receive state mining permits and federal coal leases, Cloud Peak is still responsible for all reclamation costs at the mines.”

NTEC spokesman Erny Zah said Thursday he could not comment because the bond negotiations are active. Wyoming officials aren't worried about the mines' current bonding, state Department of Environmental Quality spokesman Keith Guille said.

“They are adequately bonded. We have to review bonds every year to make sure they are meeting their standard,” Guille said.