Environmental groups are objecting to the way Peabody Energy Corp. is outlining how it will deal with various bonding obligations as the company continues to reorganize under Chapter 11 bankruptcy.
The Environmental Law & Policy Center and the Western Organization of Resource Councils filed objections Jan. 20 in the U.S. Bankruptcy Court for the Eastern District of Missouri against the coal producer, alleging that Peabody did not adequately convey what it intends to do about hundreds of millions of reclamation and bonding obligations.
"In the disclosure statement, and in the pleadings that have flooded the docket in its wake, [Peabody] concede[s] that they cannot reorganize without a 'bonding solution' that recognizes their federal and state statutory obligations to reclaim the land they mine. Yet their 'bonding solution' remains undescribed, undefined, and ephemeral," the ELPC document said. "The debtors still have not found, let alone described, a feasible solution that meets the obligations imposed by the law."
The ELPC also said Peabody's whole reorganization plan suggests that state and federal law is waivable.
"The debtors' state and federal reclamation obligations in the four states in which they self-bond cannot be ignored or deferred," the ELPC filing said. "Moreover, the debtors surely cannot waive those regulatory interests unilaterally."
The environmental group also outlines a number of Peabody's statements they say are misleading with regard to the ways the company must comply with reclamation obligations and the total amount of obligations it has, among other things.
"The disclosure statement, while making general disclosures about Peabody's obligations under SMCRA, contains inaccurate, misleading and incomplete statements," the ELPC filing said. "This court should deny Peabody's motion to approve the disclosure statement and require Peabody to file an amended disclosure statement that provides accurate and adequate information regarding reclamation bonding obligations."
The 1977 federal Surface Mining Control and Reclamation Act regulates the environmental effects of coal mining in the United States.
Peabody spokesperson Beth Sutton told S&P Global Market Intelligence that the company plans to continue using a mix of surety bonds and self bonds. "We look forward to continuing to restore the land and provide assurances for future obligations through a potential blend of both third-party surety bonds and self-bonding."
"Peabody is funding every dollar of our coal mine reclamation and even pays tens of millions of dollars each year for a reclamation fund for other producers' former coal mines," she said. "Peabody accelerated its restoration activities this past year and reduced our bond obligation by 18%. The company restored 4,200 acres of mined land in the U.S., and for every new acre of land that was used, 1.7 acres was reclaimed."
The Western Organization of Resource Councils' objection joins the ELPC's concerns, but is specified toward Peabody's bonding obligations in Wyoming, where the environmental group said Peabody has almost $750 million in self bonds. WORC also called Peabody's disclosure about its bonding obligations in Wyoming misleading in a separate Jan. 20 filing.