- Associated Press - Wednesday, February 3, 2016

ST. LOUIS (AP) - A Midwest environmental group is questioning the ability of the country’s largest coal producer to guarantee it has enough money for future cleanup of its Illinois mines, and it’s threatening to sue the state if regulators don’t change their approach.

The Illinois Department of Natural Resources allows St. Louis-based Peabody Energy to pledge it has adequate assets to pay for the estimated $92 million needed to reclaim three southern Illinois mines once there’s no coal left to extract, or if the company shuts down.

The Chicago-based Environmental Law and Policy Center says that arrangement, known as self-bonding, puts taxpayers at risk should Peabody go bankrupt. Five other major coal companies have sought bankruptcy protection since 2014, and Peabody’s stock price has plummeted amid tighter federal regulations and an industry shift toward natural gas, a cheaper and cleaner alternative.

The company recently announced 75 job cuts at the Wildcat Hills mine in Gallatin County and its Cottage Grove site near Harrisburg. That follows another round of 250 layoffs in June that included the closing of an Evansville, Indiana, regional office and staff reductions at its corporate headquarters.

“Illinois certainly has a large amount of fiscal problems right now,” said Howard Learner, the environmental law center’s president and executive director, referring to a state budget impasse now in its eighth month. “And Illinois taxpayers don’t need to be saddled with about $100 million of mine reclamation costs if (the state) doesn’t require Peabody to put up real capital instead of self-bonding.”

In a Monday letter to DNR director Wayne Rosenthal and the head of the agency’s Mines and Minerals Department, Learner’s group asked the state to “exercise its discretion” and require Peabody to purchase surety bonds from private insurers. Learner said in an Associated Press interview that the policy center will consider filing a suit if the state persists with the practice.

A DNR spokesman responded that Peabody and its Illinois subsidiaries meets the state’s required financial standards to self-bond, a practice the Environmental Law and Policy Center said Peabody has employed since at least 2009. The state reviews such requests annually; Peabody’s audited 2015 financial statement is due next month.

Peabody spokeswoman Kelley Wright reiterated that Illinois and other states that allow it to self-bond approved the financing mechanism.

But self-bonding by Alpha Natural Resources, the nation’s No. 4 coal producer, may saddle West Virginia and Wyoming with the very sort of big-ticket obligations being targeted in Illinois. After that company declared for bankruptcy in August, the two states only expect to recoup a combined $100 million from self-bonding obligations of more than six times that amount.


Follow Alan Scher Zagier on Twitter at https://twitter.com/azagier

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