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Arch Coal

A view of Arch Coal’s Black Thunder Mine near Wright is shown in this January 2013 file photo. Amid woes over debt, Arch’s stock prices have increased over the past few weeks.

Federal mining regulators have granted Wyoming officials’ request for more time to investigate two bankrupt coal companies suspected of violating reclamation standards.

The Wyoming Department of Environmental Quality will have until Feb. 12 to investigate Alpha Natural Resources and Feb. 22 to analyze Arch Coal, according to a spokesman for the U.S. Office of Surface Mining Reclamation and Enforcement.

The spokesman, Christopher Holmes, declined comment on the office’s rationale for the decision.

Federal mining officials voiced concern last month over the pair’s reclamation status, saying the two companies may hold insufficient insurance to maintain a mining permit. Both companies have continued to mine as they navigate Chapter 11 proceedings. Their combined reclamation obligations stand around $900 million.

State regulators were initially given until Monday to respond to the concerns. DEQ officials, citing the complexity of the cases and the upcoming legislative session in Cheyenne, requested more time to address the potential violations outlined by OSMRE.

Keith Guille, a DEQ spokesman, said the department was working to respond within the allowed time. He declined further comment.

Coal companies have widely used a form of reclamation insurance known as self-bonding. The practice allows companies to use their own assets as collateral, though they must pass a financial stress test to qualify for the designation.

DEQ initially ruled Alpha no longer qualified for self-bonding status last year and ordered the Virginia-based firm to post some form of collateral. State regulators later agreed to a deal which gave Wyoming a $61 million super-priority on the company’s $411 million cleanup tab.

Arch has continued to qualify for self-bonding through a subsidiary, Arch Western Resources LLC, according to state officials. OSMRE ordered DEQ to reexamine Arch’s $490 million in self-bonds after both parent and subsidiary filed for Chapter 11 protection last month.

Neither company responded to a request for comment on the decision.

Theodore Spencer, a senior policy adviser at the Natural Resource Defense Council, said Arch and Alpha should not be allowed to bond given their financial situation.

“We hope OSM stays strong because we believe there are clear problems that need to be addressed by regulators,” Spencer said. “We would like to see a thorough investigation and ultimately enforcement of the rules.”

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Follow energy reporter Benjamin Storrow on Twitter @bstorrow

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