Reclamation funds stall final sale of Kemmerer coal mine

The sale of the Kemmerer coal mine to Virginia billionaire Tom Clarke’s Western Coal Acquisition Partners has hit a snag. The delay stems from uncertainty among Westmoreland affiliates regarding who will be responsible for paying for federally-mandated reclamation funds at the Kemmerer mine.

At this point, Westmoreland Resource Partners — which remains in Chapter 11 bankruptcy proceedings —  is still responsible for the reclamation funding. Clarke’s company is a division of Merida Natural Resources. The company’s $215 million bid in February was the sole offer for the Kemmerer mine.

The Surface Mining Control and Reclamation Act of 1977 was the first legislation to require that mining companies post a bond that would pay for environmental reclamation of the site if it were to go out of business.

The Department of Environmental Quality has granted Clarke’s company a license to mine. But the permit transfer from Westmoreland to Merida Natural Resources cannot be finalized until the buyer can prove they have the funding to pay for the federally-mandated cleanup.

Lawyers for the recently-organized Westmoreland Mining Holdings filed a complaint in bankruptcy court in Houston, Texas, on March 21.

“We understand that WMLP and Merida intend to consummate the sale in the next few days,” the court filing reads.

The court documents explain that the creditors learned that Westmoreland Resource Partners and Clarke’s company would be violating the Kemmerer Purchase Agreement if they close on the sale of the coal mine without issuing replacement bonds for reclamation.

The creditors’ lawyers state in the complaint that Westmoreland is not even close to reaching an agreement with Merida Natural Resources regarding the reclamation bonds for the Kemmerer mine. The complaint calls for the court to enforce the reclamation bond agreement before the sale of the Kemmerer mine is finalized.

Clarke was unsuccessful in his bid to buy Westmoreland coal mines in Ohio in February.

The Ohio Department of Natural Resources filed an objection to Clarke’s bid, citing concerns about his company’s ability to pay for environmental liabilities and reclamation funding at the mines.

This is not the first time the Kemmerer coal mine buyer’s financial stability has been called into question. In February, a bankruptcy judge in Texas ruled that Westmoreland could end the collective bargaining agreements with the United Mine Workers of America at the Kemmerer mine. The decision effectively froze retiree pensions and health care benefits. The union then turned its attention to negotiating with the new buyer.

Clarke stated that paying the Kemmerer retiree health care and benefits is not financially feasible for his company, but that he wants to work with the union and the miners to build a “strong, stable future for Kemmerer.”

“I think the surety bond provider may have some concerns about Clarke’s ability to either complete the reclamation or maybe doesn’t have the collateral that they need to backstop the loan,” senior Sierra Club attorney Peter Morgan told Wyoming Public Media earlier this week.

According to the Wyoming Mining Association, reclamation standards at coal mines are heavily regulated before mining even begins. Top soil and the overburden soil that covers the mineral is removed and saved.   

Once mining operations are finished, that soil is used to fill in the holes left by mining and restore the land to the original topography. The Wyoming Mining Association states that nearly 50 percent of land in Wyoming that has been coal mined has been reclaimed or is in the process of being reclaimed.