Alpha Natural reorganization plan not viable: U.S. government

CHICAGO (Reuters) - The U.S. Department of Justice has opposed a plan by coal producer Alpha Natural Resources to sell valuable assets to its creditors, which it said puts significant mine cleanups at risk, according to a court filing on Monday.

The sales are part of Alpha Natural’s plan to emerge from bankruptcy protection, which it filed last August in the midst of plummeting coal demand. Environmental groups have said the plan would leave the reorganized group with insufficient funds to tackle cleanups.

Federal law requires coal companies to restore land they have mined, but a string of bankruptcy filings by major U.S. coal companies has raised concern among environmental agencies and the government that future mine cleanups may be at risk.

“The plan as proposed is not feasible or viable in terms of providing for the completion of environmental reclamation and long-term water treatment” at the company’s mining sites as required by federal law, the U.S. government said in its filing opposing Alpha’s plan in U.S. Bankruptcy court in Richmond, Virginia.

Alpha Natural declined to comment.

The government does not plan to approve the transfer of any federal lease or contract unless cleanups are assured, the Department of Justice said, adding that the transfer of such leases without government consent is prohibited.

It said that the Environmental Protection Agency and other government departments and agencies supported its stance.

Earlier this month, West Virginia’s environmental regulator said Alpha had agreed to cover hundreds of millions of dollars of mine cleanups in that state.

Reporting by Tracy Rucinski; Editing by Andrew Hay