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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 toput an end to illegal coal mining in the western United States, WildEarthGuardians todayfiled a formal complaint calling on the Obama Administration to forcePeabody Energy to pay more than $1 billion in legally required clean upguarantees or cease its mining operations in Colorado, New Mexico, and Wyoming.

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

In a citizen complaint filed with the U.S. Office of SurfaceMining Reclamation and Enforcement, WildEarth Guardians called on the ObamaAdministration to investigate Peabody’s practice of “self-bonding” its coalmines 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 coalproduces more than 330 million metric tons of carbon dioxide annually, morethan 5% of all U.S. greenhouse gas emissions.

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

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

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

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

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

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

The complaint comes as the coal industry has declinedprecipitously in the last year. Coal giants Alpha Natural Resources and ArchCoal have both filed for bankruptcy. Reports indicate Peabody Energy, which isthe nation’s largest coal company, is nearing bankruptcy as well. The company’sstock has declined from a high of more than $1,000 per share in 2011 to currentprice of around $3.50 per share. In the last year, the company’s net worth hasdeclined 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 andinclude the North Antelope-Rochelle mine, which alone produces more than 10% ofall U.S. coal.

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

Although Peabody has announced its intent to sell itsColorado and New Mexico assets, this transaction has yet to be finalized and itremains unclear whether the purchaser, Bowie Resources, will be able to securefinancing.

Much of Peabody’s mines underlie public landsand extract coal that is owned by the American public. The company is thesecond largest holder of publicly owned coal leases in the western UnitedStates.