U.S. says investigating Wyoming for lax coal oversight

WASHINGTON (Reuters) - The leading U.S. regulator for the coal industry on Friday said it suspects Wyoming officials have wrongly allowed mining companies to forego cleanup insurance.

The notice begins a formal federal review by the Interior Department’s Office of Surface Mining and Reclamation Enforcement.

If federal officials find wrongdoing or an abuse under the law, they could assume oversight of the industry in Wyoming.

Specifically, federal regulators want to know whether two now-bankrupt mining companies, Arch Coal and Alpha Natural Resources, have the wherewithal to cover several hundred million of dollars in future cleanup costs.

At issue is a practice known as self-bonding, allowed under a decades-old mining program, in which some of the country’s biggest coal companies forego insurance on a portion of future mine cleanup costs.

Officials estimate that roughly $3.6 billion in self-bond liabilities could fall to taxpayers and “it is a big issue,” Secretary of the Interior Sally Jewell told Congress in December.

Taken together, Arch and Alpha have left roughly $900 million in future cleanup costs through self-bonding in Wyoming.

A spokesman said the Wyoming Department of Environmental Quality said the agency had received the letter and would respond within 10 business days as required.

Editing by Bernard Orr