TORONTO (miningweekly.com) – US coal producer Alpha Natural Resources had been notified by the Wyoming Department of Environmental Quality's Land Quality Division (LQD) that the LQD believed the company no longer qualified under the ‘self-bonding’ programme in the state, under which Alpha avoided insurance or provisions of about $400-million to be used to clean up its mines upon closure.

Federal and state laws allowed certain financially robust companies to bypass obtaining surety bonds for a portion of the money required to secure payment of certain long-term obligations, including mine closure or reclamation costs, water treatment, federal and state workers’ compensation costs, obligations under federal coal leases and other miscellaneous obligations.

NYSE-listed Alpha had previously said failure to obtain or renew surety bonds on acceptable terms or maintain self-bonding status could affect its ability to secure reclamation and coal lease obligations, which could negatively affect its ability to mine or lease coal.

The company said it disagreed with the LQD's assessment, believing that it had fully complied with the regulations and was currently reviewing all options to reverse or rectify the LQD judgment.

Alpha on Friday explained that it had determined its compliance by following a methodology outlined by state regulations and recently provided supplemental fiscal information for the LQD to review.

“However, despite repeated attempts to gain clarity from the LQD regarding any changes the division has made in interpreting these regulations, numerous questions remain unanswered that Alpha believes should have been addressed prior to any determination being made,” the company said in a statement.

The LQD gave Alpha 90 days to provide substitute bonding.

Alpha chief financial and strategy officer Philip Cavatoni said the company appreciated the “firm but fair approach” the Wyoming Department of Environmental Quality had used in managing its self-bonding programme, but lamented that “the limited transparency in this current process is concerning”.

The company was now waiting for clarification from the LQD.

Alpha, which had mining operations in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming, in April, received notice from the NYSE that it was in danger of being delisted, as its closing price was consistently below the minimum $1-a-share threshold.

Earlier this year, West Virginia regulators also became concerned Alpha would not be able to continue self-bonding for mine clean-up costs, while the company said it might not be able to afford to buy bonds from insurance companies.

Alpha had estimated that self-bonding by coal companies currently operating in Wyoming was about $2-billion, of which Alpha's share was just more than $400-million.

According to the Wyoming Mining Association, Wyoming was home to nine of the top ten producing mines in the US and coal output provided the second largest source of tax revenue for the state and local governments, estimated at over $1.1-billion in 2013 alone.

Alpha stocks closed 9.5% lower on Friday at $0.50 apiece, having shed nearly 85% of the stock’s value in the previous 12 months.