18 February 2016 | WildEarth Guardians News Release
Denver—In response to a formal complaint filed by WildEarth Guardians, the U.S. Department of the Interior directed the states of Colorado, New Mexico, and Wyoming to investigate whether Peabody Energy should be required to pay more than $1 billion to guarantee its coal mine cleanups.
“This is major step forward for reining in coal and safeguarding our climate,” said Jeremy Nichols, WildEarth Guardians’ Climate and Energy Program Director. “For too long, Peabody has ridden on the backs of the American public and that’s finally set to change.”
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 and the largest privately owned coal company in the world. In the U.S., the company 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.
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 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. Guardians’ complaint called on the Obama Administration to enforce the law and ensure Peabody post adequate bonds or stop mining.
In letters to Colorado, New Mexico, and Wyoming regulators, the Interior Department directed the states to investigate whether Peabody qualifies for self-bonding. Interior gave the states 10 days to respond.
The 10 day notices come 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.
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.
Contact: Jeremy Nichols (303) 437-7663 email@example.com
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