Committee clarifies use of irrevocable letters of credit; HB41 passes with amendment

The Minerals, Business & Economic Development Committee on Monday approved House Bill 41, clarifying that irrevocable letters of credit issued by federally insured credit unions may be accepted by the Wyoming Department of Environmental Quality in certain circumstances and specifying limits for coal mines that are governed by federal rules.

Representative Martha Lalley introduced the bill as a constituent‑driven clarification after a credit union and an operator asked whether credit unions could issue irrevocable letters of credit in lieu of bonds for reclamation and other DEQ financial assurance requirements. "A credit union in my community wrote me ... asking to review the statute and consider proposing a revision," Lalley said.

DEQ Director Todd Parfitt and agency staff told the committee the bill provides needed clarity and that coal mines are governed by a federal regulatory regime that currently requires bank instruments; the DEQ proposed a small drafting adjustment to ensure the statutory text preserves that federal requirement for coal operations. Parfitt explained the proposed line change would make the statute read "for coal mines, in lieu of a bond" to maintain consistency with federal coal regulations.

The bill text adds credit unions as an acceptable issuer of irrevocable letters of credit where federal regulation does not prohibit their use. DEQ's administrator for management services, Kimber Wichtman, and the agency's Land Quality Division administrator participated in the testimony and worked with the sponsor on the drafting.

Witnesses from the financial sector and industry offered differing views. Bobby Frank, representing Wyoming credit unions, said the change would resolve a practical problem where a credit union's letter of credit could not be accepted by DEQ for a small gravel operator. Scott Meyer, representing the Wyoming Bankers Association, opposed the change and raised differences in regulatory oversight between the FDIC (banks) and the NCUA (credit unions), noting different supervisory regimes and potential constitutional questions about public entities holding funds. Meyer said the NCUA provides deposit insurance but contended the agencies exercise different regulatory authority.

The committee adopted a technical amendment clarifying the statute's application to coal mines and then approved the bill by roll call; the committee chair said Representative Lalley would carry HB41 to the House floor. The transcript records the amendment vote and a subsequent roll call on the bill; the committee passed the measure unanimously on the record with one member excused.

The bill changes statutory language in the DEQ bonding provisions to specify that irrevocable letters of credit "shall be issued by a bank that is insured by the Federal Deposit Insurance Corporation or a credit union that is insured by the National Credit Union Administration" in applicable sections, and sets an effective date provision tied to any required DEQ rulemaking. DEQ staff indicated they might need a rulemaking step for one subsection, which the bill marks for later effective implementation.