Peabody Reaches Deal With Regulators On Outstanding Reclamation Obligations

Jul 27, 2016

Credit Peabody Energy / Wikimedia Commons

Peabody Energy has reached a deal with regulators in several states over its outstanding cleanup obligations. 

Peabody declared bankruptcy in April with more than $1 billion in self-bonded reclamation obligations at its mines in Wyoming, Indiana, New Mexico and Illinois. Self-bonding means the company has promised that it will meet its future clean-up obligations, but has not put up any financial guarantees to secure that promise. Peabody has more than $700 million in self-bonded reclamation in Wyoming alone. 

In the bankruptcy court filing, Peabody says if it were forced to secure the full amount, it would be unable to continue operating its mines.

Instead, Peabody and state regulators in Wyoming, Indiana and New Mexico have reached agreements that give the states priority claims on a pool of $200 million—less than a fifth of the company's total obligations—in the event Peabody cannot reemerge from bankruptcy and instead liquidates. 

Wyoming regulators offered Arch Coal and Alpha Natural Resources similar deals in their bankruptcy proceedings over the objections of environmental groups. The federal government recently chastised Wyoming over the deal with Alpha, but the state maintains it acted in the public interest. 

A bankruptcy judge needs to approve the agreements with Peabody before they go into effect.