Responding to a federal inquiry, the State of Wyoming defended itself against accusations that it is allowing coal giant Peabody Energy to continue operating in violation of mining regulations.

In February, the federal government asked the State of Wyoming to justify why Peabody Energy continues to meet its reclamation obligations, despite the company’s deteriorating financials.

In Wyoming, Colorado and New Mexico, Peabody has more than a billion dollars in 'self-bonded' clean-up obligations, which means the reclamation is guaranteed not by a third party, but by the health of the company’s own balance sheet.

With Peabody teetering on the edge of bankruptcy, environmental groups have complained to the federal government that the company should be required to put up cash or a third-party bond to cover those obligations.

But the State of Wyoming says because Peabody’s reclamation obligations are guaranteed by a subsidiary that passes the financial tests for self-bonding, there is no reason for the state to ask for substitution.

The state did say in its response that it would like to sit down with the federal government to discuss the issue.