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restoration of all lands disturbed by surface mining. As your agency recently wrote in a legal submission <br />in the Arch Coal bankruptcy proceedings: <br />SMCRA is designed, inter alfa, to ensure that coal nine permittees throughout the United States <br />take the necessary steps to protect the public from serious environmental and health risks that <br />could arise from coal shining operations and activities ... SMCRA deters environinellial <br />irresponsibility by holding regulated entities responsible for environnienlal harm.1 <br />We believe that Peabody's failure to set aside sufficient financial resources to guarantee full reclamation <br />of its mines clearly contradicts the intentions of SMCRA as OSMRE so aptly describes. <br />Peabody has avoided setting aside sufficient resources for mine reclamation by painstakingly <br />structuring its affairs such that, at least on paper, the company appears to qualify for a provision of <br />SMCRA commonly known as "self -bonding." Self -bonding was designed only for companies in the peak <br />of financial health, and for which bankruptcy was all but unthinkable. Yet Peabody has continued to take <br />advantage of the self -bonding even as it has descended into financial chaos. <br />To qualify for self -bonding, Peabody Energy acts through a wholly-owned subsidiary, Peabody <br />Investment Corporation (PIC), which holds a large share of Peabody's mining assets but little of the <br />parent corporation's debts. On paper, PIC's high asset -to -debt ratio appears to qualify the subsidiary for <br />self -bonding. But appearances deceive: PIC is just as financially flimsy as its corporate parent, since the <br />subsidiary's assets are fully pledged to support the parent company's unsustainable debt load. In the event <br />that Peabody Energy should declare bankruptcy, Peabody Investment Corporation will almost certainly be <br />pulled into bankruptcy along with its corporate parent. And just as has occurred in the bankruptcies of <br />Arch Coal and Alpha Natural resources, a bankrupt Peabody Energy is unlikely to set aside sufficient <br />financial resources to fully cover its cleanup obligations and to replace its self -bonds with more secure <br />financial guarantees. <br />In short, Peabody Energy's imminent bankruptcy could leave the American public on the hook <br />for coal mine cleanup, as so presciently envisioned by OSMRE itself in its 1983 discussions of <br />reclamation bonding published in the Federal Register: <br />LI file event of bankruptcy, the regulatory aulhority would prohably be in the position of an <br />unsecured creditor... Bankruptcy proceedings are often lengthy and involved, and the regulatory <br />authority could have to settle on less than 100% payment oil the indemnity agreement [i.e., self - <br />bond]. The regulatory authority nhav be lef upilh insufcient fuulcls to complete dre rechunalion <br />plan and may have to obtain funds elsewhere to do so.z <br />As OSMRE suggested, if Peabody goes bankrupt without setting aside stiff icient financial guarantees, the <br />state or federal governments --that is, we, the people—might have to pay to clean up the company's <br />messes. <br />haps:Ncases.primeclerk.com'archcoal!Home-Download PDF?idI Mjc4NTYy&id2 0 <br />' <br />http:.'/www.osmre.govl;lrg/FEDREG�-48fr36-118.pdf <br />Page 2 of 4 <br />