A federal bankruptcy judge has approved a deal resolving a dispute between coal operator Alpha Natural Resources and West Virginia regulators over the company's mine reclamation bonds.
U.S. Bankruptcy Judge Kevin R. Huennekens' order said the agreement is fair and equitable, and represents "a sound exercise of the Debtors' business judgment." He overruled an objection filed by the Sierra Club, the West Virginia Highlands Conservancy and the Ohio Valley Environmental Coalition.
Cindy Rank with the West Virginia Highlands Conservancy said Wednesday that the groups are disappointed but have not decided how to proceed.
Tuesday's order, filed in U.S. Bankruptcy Court in Richmond, Virginia, authorized Alpha to enter into a consent order with the West Virginia Department of Environmental Protection. Under the consent order, Alpha agreed to reduce its self-bonding obligations and to continue reclaiming mining operations in the state.
Alpha also will provide $39 million in financial commitments to back its remaining self-bonded obligations. The company has more than 500 mining permits for its operations in West Virginia.
Alpha had said in a court filing that it issued self-bonds to cover more than $244 million in reclamation obligations. After the company filed for Chapter 11 bankruptcy in August, it told the DEP that it might no longer meet criteria for self-bonding. The agency then ordered Alpha to replace the self-bonds with other forms of bonding.
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Alpha's Dec. 7 filing said company believed the DEP did not have the authority under bankruptcy law to require it to post a commercial bond or collateral to cover the self-bonded obligations. But the company was not certain it would prevail if it litigated the dispute.
The environmental groups argued that the agreement violates federal law requiring West Virginia to order mine operators who don't have adequate bonds to cease operations and begin reclamation. Their court filing also said the agreement will leave no money to support bonding for reclamation in other states, except Wyoming.
In October, Huennekens approved an agreement between Alpha and Wyoming that gave the state priority access to $61 million in case either or both of Alpha's two coal mines there closed and needed to be reclaimed.