WildEarth Guardians Puts Peabody on Notice of Coal Violations

Nation's Largest Coal Company Faces Lawsuit Over Failure to Guarantee Coal Mine Cleanups

Denver—Citing the coal giant’s financial woes and failures to comply with federal mining laws, WildEarth Guardians today put Peabody Energy on notice that the company faces a federal lawsuit if it doesn’t start paying to clean up its mines in the American West.

“Peabody Energy is saddling Americans with enormous coal mine clean up costs,” said Jeremy Nichols, WildEarth Guardians’ Climate and Energy Program Director.  “Worse, as we pay, Peabody continues to destroy our climate.”

In a notice of intent to file suit sent today to Peabody Energy, the nation’s largest coal company and world’s largest private sector coal company, WildEarth Guardians highlighted how the company no longer qualifies for “self-bonding” at its mines in Colorado, New Mexico, and Wyoming. 

In the U.S., Peabody produces 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 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.  The U.S. Department of the Interior has ordered the states of Colorado, New Mexico, and Wyoming to investigate whether Peabody qualifies for self-bonding.

In total, Peabody guarantees more than $1.1 billion in self-bonds in the western U.S. Nationwide, Peabody guarantees more than $1.4 billion in self-bonds. The company’s net worth, as reported at the end of 2015, is only $870 million.

“We’re 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. It’s time for Peabody to start keeping coal in the ground.”

By law, where a company no longer qualifies for self-bonding, it must post an alternate bond within 90 days or cease coal extraction. Guardians’ notice today threatens to file suit if Peabody does not post an alternate bond.

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.

Under the U.S. Surface Mining Control and Reclamation Act, citizens and citizens groups can file suit in federal court to enforce violations of the law.  Before filing suit, citizens must provide 60-days notice of the violations.  Today’s letter kicks off that 60 day period.


 

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