CHARLESTON, W.Va. – The West Virginia Department of Environmental Protection has finalized what was previously announced as an agreement in principle with Alpha Natural Resources, the state’s largest coal operator, which filed for bankruptcy in August 2015.
The agreement earmarks approximately $325 million to cover the reclamation of all of Alpha's legacy liability mine sites in West Virginia, as well as the company’s continuing operations in the state.
“This agreement is a huge deal for our state. It ensures that funding will be available to clean up hundreds of mine sites across West Virginia,” said DEP Cabinet Secretary Randy C. Huffman. “Because of Alpha’s commitment to honor its reclamation obligations, and the DEP’s work in securing that commitment, the government and the citizens of West Virginia won’t be left holding the bag.”
The agreement was filed yesterday in U.S. Bankruptcy Court by Alpha, which also filed similar agreements with other states it operates in and agreements with several federal agencies. The bankruptcy court also entered an order yesterday approving the agreements and confirming Alpha’s bankruptcy plan. A closing is expected later this month.
Under the West Virginia agreement, the surety bonds Alpha previously posted to obtain its mining permits will remain fully in place. But Alpha, the Mountain State’s last remaining self-bonded coal company, will post an additional $100 million in surety and other forms of bonds to replace all of its self-bonds at its active and inactive mining sites in the state. Additionally, Alpha will immediately post $39 million in letters of credit or cash bonds as financial assurance for the performance of its land reclamation and water treatment obligations at its other remaining self-bonded sites in West Virginia.
Alpha has also committed to – over time – replace the self-bonding for, and reclaim and treat water at, all of its remaining mining sites, in West Virginia and elsewhere, including sites at which it has ceased mining operations. To that end, Alpha and its secured creditors have committed to provide at least an additional $229 million in secured funding. Of that amount, Alpha has committed to provide at least $124 million for reclamation and water treatment over 10 years, with a further commitment to provide half of its excess operating cash flow over and above that amount for reclamation and water treatment at its legacy sites.
Contura, an entity formed by Alpha's secured creditors to purchase the bankrupt coal operator’s Wyoming and other operations, has agreed to provide the remainder of the funding. That includes an additional $55 million in reclamation and water treatment funding over the next five years and a guarantee for Alpha's excess operating cash flow commitment, up to an additional $50 million.
West Virginia's share of the $229 million in funds committed to reclamation and water treatment will exceed 80 percent for at least the first two years.
This marks the first time that a large coal company has committed to remain in business and continue to operate for the primary purpose of reclaiming its legacy mining sites, according to Kevin W. Barrett, a Bailey & Glasser partner and special assistant state attorney general, who was contracted by DEP to work on the Alpha and other coal bankruptcy cases.
For more DEP news and information, go to www.dep.wv.gov. Also, be sure to connect with the agency on all social media platforms. Follow @DEPWV on Twitter and find us on YouTube by searching “Environment Matters.” For specific information about our REAP (Rehabilitation Environmental Action Plan), West Virginia Project WET (Water Education for Teachers), West Virginia Watershed Improvement Branch, Youth Environmental Program and Human Resources initiatives, connect on Facebook.