July 27, 2016

Howard A. Learner

ELPC Ends Peabody’s Flawed Self-Bonding of Its Mine Reclamation and Environmental Cleanup

ELPC has achieved a breakthrough in our advocacy campaign challenging Peabody Energy's flawed "self-bonding" of its coal mine reclamation and environmental clean-up requirements under the Surface Mining Control and Reclamation Act.

We are seeking to avoid the risk that Peabody will evade its financial responsibility and force the public to pay for the coal mine clean-up costs. Taxpayers should not be left holding the financial bag for Peabody’s obligations.

The irresponsible practice of “self-bonding” is a coal mine company’s promise that funds will be available in the future, rather than setting aside actual funds or purchasing surety bonds, to pay for its mine reclamation and environmental clean-up responsibilities. Peabody Energy, the world’s largest private-sector coal company, filed for Chapter 11 bankruptcy earlier this year.

The U.S. Bankruptcy Court made two key rulings on July 20th in response to ELPC’s motions.

First, U.S. Bankruptcy Judge Barry Schermer ruled from the bench that ELPC has standing as a “party in interest” to engage before the bankruptcy court to seek to require Peabody Energy to fully comply with its responsibilities to pay for full and effective mine reclamation and environmental clean-ups at its coal mine sites. Peabody’s lawyers argued, in a remarkable 33-page brief, that ELPC lacked any standing to express our position on mine reclamation bonding. In short, Peabody essentially said that environmental organizations could not even question Peabody’s promises to return the land to its pre-mining condition. The Judge rejected these arguments in his opinion from the bench and subsequent Order.

Second, when a company is in bankruptcy, federal law places an “automatic stay” on some outside legal proceedings. The Court granted ELPC’s and the Western Organization of Resource Councils’ motion to lift the stay, to the extent that it applied, on our citizen complaints to require the Illinois, Indiana, New Mexco and Wyoming departments of natural resources and the federal Office of Surface Mining Reclamation and Enforcement to take action to make sure that Peabody provides sufficient funds for its mine reclamation.

These two rulings are significant. They put ELPC in a position to assert that sufficient funds be made available for mine reclamation and environmental clean-up at coal mines in Illinois, Indiana, New Mexico and Wyoming. And, as a practical matter, the Judge has made clear that these environmental responsibilities are on the court’s radar alongside the competing demands of Peabody’s creditors.

This is key progress in ELPC’s and our allies’ advocacy against Peabody’s irresponsible practice of self-bonding going forward. Stay tuned for more news to follow.