Peabody’s settlement over polluted sites comes amid uncertainty for environmental funding

A mining company’s debt-cutting plan will leave taxpayers facing a bigger bill for cleaning up nearly two dozen hazardous sites primarily in the central U.S., including a swath of northeast Oklahoma that once produced lead ore for bullets in both World Wars.

The 22 properties will be shed by miner Peabody Energy Corp.when it leaves bankruptcy with a plan that shifts cleanup costs to the government.

Peabody’s chapter 11 plan, approved Friday by a federal judge, and related settlements allow the company to provide about 2% of as much as $2.7 billion in environmental liabilities asserted by federal, state and tribal authorities for the sites polluted from lead and zinc mining that ended decades ago.

A Peabody spokeswoman said the company is “pleased to resolve the government’s concerns and to be part of a solution to remediate these properties,” which it didn’t mine but for which it was assigned liability through a 1997 corporate spinoff. Peabody, along with other liable companies, has paid for cleanup at these sites in the years before filing chapter 11.

But the gap between what governmental authorities sought from Peabody and what they will get at the end of the bankruptcy means the cost of cleaning up the sites will fall to governments and taxpayers. That comes as state budgets are stretched thin and the Environmental Protection Agency faces a 31% funding cut under President Donald Trump’s budget proposal.

The leftover mine waste in Oklahoma is in the Tar Creek Superfund site, where lead ore was used to make bullets for U.S. troops before mining operations halted in the 1970s. The area is still so polluted that the federal government has paid to relocate residents.

“The state doesn’t have the money to do it,” said Oklahoma State Rep. Ben Loring, a Democrat whose district includes the Tar Creek site. “If the EPA is being cut, as everyone seems to be suggesting, it’s going to be a problem that’s going to be there forever and that is not in the best interest of anybody.”

A spokeswoman for the Oklahoma Department of Environmental Quality said Tuesday that funding for the federal Superfund program is “critically important” to addressing historical contamination and that any reductions would likely mean delays in remediation.

Peabody, which sought chapter 11 protection last year amid a downturn in coal prices, is legally obligated to clean up sites related to its coal mining. That is unrelated to responsibility for the 22 sites it inherited through the spinoff.

Like other industrial companies, from auto maker General Motors to copper miner Asarco, Peabody sought to use bankruptcy’s expansive debt-cutting tools to trim these legacy liabilities and free itself from future obligation.

Peabody said its environmental liabilities were no more than $63 million, saying that roughly half of the $2.7 billion in governmental claims were duplicates and others overstated.

Government authorities objected. Last Thursday, Peabody announced settlements worth about $43 million to help fund cleanup of the sites, beyond the more than $7 million already provided in its bankruptcy-exit plan.

A spokesman for the Justice Department, which represented the EPA in the bankruptcy case, said Friday that the settlement “is a favorable outcome that maximizes the recovery for environmental liabilities while bringing an end to further resource-intensive litigation.”

The funding, however, will fall short of what governmental authorities say is needed for cleanup. The EPA sought more than $75 million from Peabody solely for Tar Creek, a hazardous site that earned a Superfund designation in the 1980s after acidic mine water turned the creek orange.

Through 2015, court papers say the agency has incurred more than $352 million in costs related to Tar Creek.

The site is dotted with dozens of mounds of ground-up rock, which can reach more than 100 feet high and contain harmful metals like lead.

“Every time the wind blows, the dust goes off those mine tailings,” said Shirley Chesnut, a local physician who said elevated concentrations of lead were found in the blood of more than one-third of Native American children tested in the early 1990s.

Blood-lead levels have since declined.

The total cost of cleanup is expected to exceed $1 billion, according to the Quapaw Tribe of Oklahoma, whose reservation includes the site.

The pollution poses a health risk to tribes that live downstream from Tar Creek, said Oklahoma environmental activist Rebecca Jim, a member of the Cherokee Nation

“I have a real fear that without an EPA that’s strong and properly funded, that this will never be completed,” she said.

 
A mountain of chat, mine waste that can be toxic, rising above northeast Oklahoma at the Tar Creek Superfund site. Photo: JIM LO SCALZO/EUROPEAN PRESSPHOTO AGENCY