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Environmentalists will challenge Peabody's reorganization plan over reclamation

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Environmentalists will challenge Peabody's reorganization plan over reclamation

An environmental group intends to challenge Peabody Energy Corp.'s proposed reorganization plan for failing to adequately address reclamation obligations.

"We've continued to be present and engaged in the bankruptcy proceeding," Howard Learner, an attorney for the Environmental Law and Policy Center, told S&P Global Market Intelligence. "We will object in the bankruptcy court."

"We're disappointed that Peabody's plan fails to commit to replace its flawed self-bonding for mine reclamation with real financial commitments including surety bonds," he said in a press release.

Peabody filed a reorganization plan Dec. 22 that will allow it to emerge from Chapter 11 bankruptcy with many of its assets intact, and executives said the company would "not only survive but thrive."

The coal giant reached a superpriority settlement agreement with Illinois in August and made other deals with Wyoming, Indiana and New Mexico before that.

Learner said most of these deals cover only reclamation obligations during the bankruptcy reorganization process, however, and that Peabody continues to practice self-bonding in many states.

"In fact, the company's first proposed reorganization plan dodges the issue and unfairly risks shifting the costs for Peabody's environmental cleanup responsibilities onto the public. A 'feasible' reorganization plan for Peabody to emerge from bankruptcy should not include continued self-bonding of mine reclamation costs," he said. "Peabody should be required to live up to its mine reclamation responsibilities and assure that it will not saddle taxpayers with these costs."

Beth Sutton, spokesperson for Peabody, told S&P Global Market Intelligence that "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. We look forward to continuing to restore the land and provide assurances for future obligations."

Reclamation obligations have been the focus of a number of lawsuits during the reorganization of other coal companies such as Arch Coal Inc. and Alpha Natural Resources Inc. The former committed to moving away from self-bonding in Wyoming, while the West Virginia Department of Environmental Protection filed a complaint against Alpha for not disclosing all of its liabilities during the bankruptcy process, which it was worried would potentially affect the company's ability to meet its reclamation obligations in the state.