Why Utah Mining Authorities Closed the Coal Hollow Mine Near Alton
Coal Hollow mine has long been plagued by compliance violations and non-payment of property taxes
State mining regulators shut down a coal mine in southern Utah this week after missing several deadlines to replace its invalid reclamation bond, issued by a company that is currently the subject of a insurance fraud investigation.
Coal Hollow Mine owners must provide Utah Division of Oil, Gas and Mining (DOGM) with $13.4 million bond by March 10, or begin reclaiming permit area of the mine, in accordance with the cessation order.
On Tuesday, two DOGM staff delivered the cease order to Alton Coal Development’s site manager, Kirk Nicholes, and carried out an inspection to ensure that active coal mining was complete at the site. of 1,017 acres.
“We felt that we had given them enough time since our Premiership order [issued Oct. 19]said DOGM director John Baza. “After several extensions, we were probably losing credibility with our federal overseers at the Office of Surface Mining. We wanted to make sure we were doing the right thing and going through with our application.
He stressed that the mine, which employs about 30 people, will be allowed to resume operations once the bond is in order.
One of five active coal mines in Utah, Coal Hollow is the only surface operation. Its operators had obtained a federal lease east of the bucolic town of Alton in Kane County and moved their operations there from private land they had operated.
Utah law prohibits mines from operating with a bond sufficient to cover the cost of land restoration.
“It helps the state not be stuck with the responsibility of recovering a coal mine if the operator defaults,” Baza said. “We can’t look at a crystal ball and say one operator is going to last longer than another operator. All operators are therefore required to follow the same set of rules, namely to put in place a full cost bond for coal recovery.
Reclamation is a sensitive subject for Alton Coal. The operator is now having problems with the local farming families whose land it used for an earlier phase of the mine. The landowners say their property has not been fully reclaimed for agricultural use as required by law. In response, DOGM declined to release the posted reclamation for this area until Alton Coal had completed the work.
Meanwhile, the Cedar City-based company hasn’t paid its property taxes in the past four years, according to Kane County Assessor’s records, which show the company is $443,000 in arrears.
A voicemail message left at the Alton Coal office in Cedar City was not returned.
The bond fiasco began last year when Alton Coal replaced its bonds with instruments issued by a company called the Triangle Surety Agency under a “producers agreement” with an insurance provider called Lexington National Insurance Corp. , according to documents filed with DOGM. In September, Lexington informed DOGM that these bonds were never valid and were likely fraudulent.
Although the coal producer may not be responsible for the bond’s shortcomings, DOGM Director John Baza has asked Alton to post a valid bond or cease operations by Dec. 14. The agency has since granted three extensions of time. On February 7, the agency finally lost patience and halted mining operations.
Ohio coal tycoon Thomas Ungurean owns a controlling interest in the Coal Hollow mine, through an LLC called SH Coal Investment, according to DOGM filings. James Waylund of Naples, Florida is listed as controller, owning a 21% stake in Alton Coal Development. He did not return a voicemail on Friday.
For years, Alton Coal sought the federal lease to 40 million tons of coal on 3,581 acres of land west of Bryce Canyon National Park, which the Trump administration awarded in 2018. After securing the federal lease in 2020, its production rebounded to over 500,000 tons in 2020, according to the Utah Geological Survey. Last year, the mine produced 349,000 tons of coal.
Under the cease and desist order, Alton is permitted to sell and remove coal from its stockpile, perform reclamation and perform any equipment maintenance, but it may not create any new disturbances on the ground. . The company had informed DOGM that it expected to have a new bond in good standing by the end of the week, according to Baza, but as of Friday nothing had been received. Alton can resume mining when the bond is in good standing.