WildEarth Guardians

Wednesday, February 10, 2016
Guardians Calls on Obama Administration to Rein in Peabody Coal

Near-Bankrupt Coal Company Illegally Avoiding $1 Billion in Coal Mine Cleanup Costs in Western United States
Contact: Jeremy Nichols (303) 437-7663 jnichols@wildearthguardians.org

Denver—Seeking to put an end to illegal coal mining in the western United States, WildEarth Guardians today filed a formal complaint calling on the Obama Administration to force Peabody Energy to pay more than $1 billion in legally required clean up guarantees or cease its mining operations in Colorado, New Mexico, and Wyoming.

“For too long, Peabody has been given a free ride to destroy our western public lands, our climate, and our clean energy future,” said Jeremy Nichols, WildEarth Guardians’ Climate and Energy Program Director. “It’s time to stop letting bankrupt coal companies ride on the backs of the American public and force them to pay their fair share.”

In a citizen complaint filed with the U.S. Office of Surface Mining Reclamation and Enforcement, WildEarth Guardians called on the Obama Administration to investigate Peabody’s practice of “self-bonding” its coal mines in Colorado, New Mexico, and Wyoming.

Peabody is the largest coal company in the United States, producing more than 180 million tons of coal annually. When burned, this coal produces more than 330 million metric tons of carbon dioxide annually, more than 5% of all U.S. greenhouse gas emissions.

By law, for a coal company to be permitted to mine, it must first post bonds to cover the costs of reclamation. This ensures that if a company becomes insolvent or goes out of business, the costs of cleaning up a mine doesn’t fall upon taxpayers.

Normally, to meet bonding requirements, companies post sureties that are backed by third party guarantors. However, in some cases, companies are allowed to guarantee their own reclamation bonds and post what is called a “self-bond,” which is effectively a corporate IOU. Self-bonding is only allowed where a company is solvent and meets certain financial criteria.

Although Peabody self-bonds all of its mining operations in Colorado, New Mexico, and Wyoming, the company is on the verge of bankruptcy and no longer meets legal criteria for self-bonding.

In total, Peabody guarantees more than $1.1 billion in self-bonds in the western U.S. Nationwide, Peabody guarantees $1.36 billion in self-bonds. The company’s net worth, as reported at the end of the third quarter of 2015, is only $1.34 billion.

“We’re effectively bailing out bankrupt big coal,” said Nichols. “This is bad for our climate, bad for the American taxpayer, and bad for our western public lands.”

By law, where a company no longer qualifies for self-bonding, it must post an alternate bond within 90 days or cease coal extraction activities. Guardians’ complaint calls on the Obama Administration to enforce the law and ensure Peabody post adequate bonds or stop mining.

The complaint comes as the coal industry has declined precipitously in the last year. Coal giants Alpha Natural Resources and Arch Coal have both filed for bankruptcy. Reports indicate Peabody Energy, which is the nation’s largest coal company, is nearing bankruptcy as well. The company’s stock has declined from a high of more than $1,000 per share in 2011 to current price of around $3.50 per share. In the last year, the company’s net worth has declined by more than 50%.

Peabody Energy operates 12 mining operations in Colorado, New Mexico, and Wyoming. Its mines in Wyoming are the largest in the nation and include the North Antelope-Rochelle mine, which alone produces more than 10% of all U.S. coal.

In Colorado, Peabody owns the Foidel Creek mine (also known as the Twentymile mine) in northwest Colorado, as well as other mining operations in the area that are undergoing reclamation. In New Mexico, Peabody owns the El Segundo and Lee Ranch mines and is the state’s largest coal producer.

Although Peabody has announced its intent to sell its Colorado and New Mexico assets, this transaction has yet to be finalized and it remains unclear whether the purchaser, Bowie Resources, will be able to secure financing.

Much of Peabody’s mines underlie public lands and extract coal that is owned by the American public. The company is the second largest holder of publicly owned coal leases in the western United States.