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By Patrick Rucker

WASHINGTON, April 16 (Reuters) - Alpha Natural Resources Inc, a struggling U.S. coal company, may be forced to buy costly new insurance or otherwise ensure it can cover obligations for cleaning up any abandoned mines, according to officials in West Virginia.

Alpha has been allowed to leave about $262 million in cleanup liabilities uninsured in West Virginia under a federal program for coal companies that meet strict financial tests. State officials told Reuters the company may no longer qualify for that relief.

"Our regulations are very clear," Harold Ward, acting director of the West Virginia Division of Mining and Reclamation, said this week. "It's up to them to remedy this situation."

Coal companies are required to have insurance or cash on hand to reclaim land damaged by mining and clean up abandoned mines in the case of bankruptcy, so taxpayers won't be stuck picking up the costs. But a federal program called "self-bonding" has allowed the most financially fit coal companies to leave a share of their total liabilities uncovered.

Self-bonding has allowed Alpha to avoid needing to have about $676 million of insurance on its mines in West Virginia and Kentucky, according to securities filings and regulators.

The filings indicate the company no longer qualifies for self-bonding.

Alpha alerted West Virginia officials to the possible shortfall in February, Ward said. State officials have told the company that it needs to acquire more insurance or find another way to make up the shortfall.

In Wyoming, where the company has operations, state officials say they need several more weeks to review the company's financial reports.

Alpha spokesman Steve Hawkins said self-bonding was one of the issues the company is discussing with West Virginia officials.

Annual premiums for coal companies typically run between 1 percent and 2 percent of the total reclamation amount, according to estimates by the Surety & Fidelity Association of America, the trade group for the industry.

Annual premiums to cover Alpha's self-bonding guarantees could exceed $10 million, and a policy could come with costly strings attached.

A struggling coal company may be required to offer a large share of collateral to even qualify for a new bond, said Robert Duke, corporate counsel for the trade group.

"Losing the qualification to self-bond and turning to the corporate surety market is uncharted territory," said Duke. "To our knowledge, the coal industry has never faced this kind of thing before."

Alpha has warned investors that losing its right to self-bond and the increased costs of surety bonds could cut into its cash and weigh on its balance sheet.

Alpha shares were at $1.06 on Thursday, plunging from about $55 four years ago, around the time it bought Massey Energy Co for $7.1 billion.

The value of Alpha's corporate bonds indicated an 85 percent chance of default, according to a January analysis by Goldman Sachs.

(Reporting by Patrick Rucker; Editing by Jeffrey Benkoe)