Alpha Natural Resources Inc no longer qualifies for a government program that subsidizes a share of mine cleanup insurance, requiring the coal company to find another way to cover roughly $400 million in liabilities, Wyoming officials said on Friday.

State officials told Alpha that it has failed financial tests that have allowed the company to defer a share of mine cleanup costs in the case of bankruptcy under a program called “self bonding.”

“At the end of the day, the rules for self bonding are very clear,” said Keith Guille, a spokesman for the Wyoming Department of Environmental Quality.

Wyoming formally warned Alpha in April that it did not meet self-bond requirements and the company did nothing to change that view in the weeks that followed, Guille said.

Alpha said it disputes the ruling, but is “investigating a range of options” to satisfy the regulator that it can cover cleanup costs.

The company had earlier warned that losing its right to self bond and the increased costs of surety bonds could weigh on its balance sheet.

In April, Reuters reported that the national mine industry regulator was examining the federal self-bond program for abuses.

Investors have lately shunned U.S. coal stocks as weak global demand, an abundance of natural gas and costly regulations have hammered the sector.

Alpha Natural’s shares were down about 4 percent at 53 cents in afternoon trading on the New York Stock Exchange.

Up to Thursday’s close, the stock had fallen nearly 85 percent in the past 12 months.

It would be difficult for cash-strapped mining companies to acquire surety bonds or offer collateral to backstop current reclamation obligations, said Robert Duke, chief counsel for the Surety & Fidelity Association of America.

“Losing the qualification to self bond and turning to the corporate surety market is uncharted territory,” Duke said.

Friday’s news comes a day after a Delaware judge asked Alpha Natural to pay for the legal defense of Donald Blankenship, the former chief executive of its Massey Energy Co unit who is facing a criminal trial over a coal mining disaster in 2010. (Additional reporting by Anannya Pramanick in Bangalore.)