Judge Rules Peabody Energy Bankruptcy Blocks Global-Warming Lawsuits
October 25 2017 - 4:33PM
Dow Jones News
By Jonathan Randles
A judge has ruled Peabody Energy Corp. is protected by its
recent bankruptcy from global-warming lawsuits brought by
California coastal communities against fossil-fuel companies.
Judge Barry Schermer of the U.S. Bankruptcy Court for the
Eastern District of Missouri ruled Tuesday that discharge and
injunction provisions included in Peabody's chapter 11 plan of
reorganization extinguish the lawsuits that were filed months after
the coal-mining company left bankruptcy in early April.
The litigation was brought by the counties of San Mateo and
Marin and the city of Imperial Beach and seeks damages tied to
greenhouse-gas emissions between 1965 and 2015. Peabody sought
bankruptcy in 2016. The ruling doesn't affect other companies that
are named in the lawsuits, filed in July.
The lawsuits say Peabody for decades has exported substantial
amounts of coal from California and claim the company has been
linked to groups that have sought to undermine climate science and
the connection between emissions and global warming and rising sea
levels. Peabody has said the lawsuits lack merit.
Judge Schermer said that the California communities were
required to bring claims against Peabody during the bankruptcy but,
instead, chose not to participate in the chapter 11. Initiating the
lawsuits after Peabody left chapter 11 was intended to give these
communities an advantage over other company creditors who went
through the bankruptcy process, the judge said.
Lawyers representing San Mateo, Marin and Imperial Beach argued
language in the company's bankruptcy plan negotiated by the U.S.
Environmental Protection Agency includes exceptions for this type
of legal action and should allow litigation to proceed against
Peabody. But Judge Schermer said the exception is limited and,
instead, designed to ensure the federal government could continue
to enforce environmental laws related to Peabody's mining.
"We are reviewing the court's decision and considering our
options," said Vic Sher, a Sher Edling LLP lawyer representing the
California communities, on Wednesday. "But it would be a shame if
Peabody, the biggest private coal company in the world, can use the
bankruptcy laws to avoid defending these cases that call into
question their role in damaging our climate, causing sea levels to
rise, misleading the public and policy makers about those impacts,
and shifting billions of dollars in costs onto coastal
communities."
Peabody sought chapter 11 protection last year as low coal
prices roiled the industry and drove other coal producers to seek
refuge in bankruptcy. The company's chapter 11 plan reduced its
debt by $5 billion. Peabody has said its stay in chapter 11
preserved the jobs of 6,700 employees as well as benefits for its
retirees.
"We are pleased with the court's decision and believe the best
path to lower emissions isn't through litigation or overt
regulation," Peabody spokeswoman Beth Sutton said. "We support a
path using technology such as high-efficiency low-emission
generation and, over time, carbon capture and storage."
The lawsuits allege fossil-fuel companies have known for decades
that greenhouse-gas emissions warm the earth's climate but sought
to conceal these dangers and undermine public support for
regulation to address the problem. A second coal-mining company,
Arch Coal, has also argued that its bankruptcy also protects it
from the litigation.
The cities of San Francisco and Oakland filed similar lawsuits
in September against oil and gas companies, specifically.
Write to Jonathan Randles at Jonathan.Randles@wsj.com
(END) Dow Jones Newswires
October 25, 2017 16:18 ET (20:18 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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