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May 6, 2005
PEABODY ENERGY: ANATOMY OF A BAD CORPORATE CITIZEN
A Project of the Sierra Club

INTRODUCTION:
Each day, new and more alarming news comes out regarding our energy future and its potential effect on public health and the environment. Despite numerous claims to the contrary, Peabody Energy sits at or near the top of the list of bad actors that have not only profited from our environmental degradation, but have actively sought to increase profits by accelerating it.

Peabody Energy is the largest coal company in the world, a Fortune 500 business with more than $3.5 billion in revenues in 2004. It is currently involved in the construction of 3 new, large coal-fired power facilities. These are the Prairie State project in Illinois, the Thoroughbred project in Kentucky, and the Star Lake project in New Mexico. In addition, the company operates the Black Mesa mine on Native American land in Arizona.

Peabody has a long history of opposing efforts to mitigate the negative environmental effects of coal production and combustion. It was an active opponent of efforts to enact a strong Clean Air Act: in 1970, of acid rain provisions in the 1990 Clean Air Act Amendments, and throughout the current efforts to significantly strengthen mercury provisions. Peabody’s most blatant attempt to undermine environmental protections has been its efforts over the past decade to discredit the world’s scientific community research that ties emissions from the burning of fossil fuels - like coal - to global warming. Its efforts have included contributions of more than $1.5 million to federal candidates and parties during the past four years -- with more than 93 percent going to Republicans– and an average of $400,000 per year on lobbying between 1997 and 2000 1.

Many companies in the U.S. and around the world are currently facing questions from their shareholders regarding potential liability and litigation when state or national measures to control global warming are established. Such inquiries have resulted in the production of documents from companies like Cinergy Corp., a leading electric utility, which assess their ability to reduce global warming emissions. In contrast, Peabody Energy is investing in dirty technology that implies an indifference to global warming and its potential costs and impacts. It actively funds misleading, pro-coal front groups like Americans for Balanced Energy Choices and the Center for Energy and Economic Development, and plans to use dirty pulverized coal technology in its proposed Prairie State, Thoroughbred, and Star Lake plants.

The Sierra Club urges Peabody Energy to immediately drop its effort to undermine common sense measures that would curb global warming, and work with the scientific, regulatory, and environmental communities to pursue clean, cost-effective solutions – that have minimal environmental impacts - to meet our energy needs. Furthermore, we urge Peabody shareholders to put pressure on management to reduce its future liability when global warming legislation and regulations are finally put in place, cease its corporate misdeeds immediately, and work cooperatively to address the environmental crisis that it has handsomely profited from creating.

COAL-FIRED ELECTRICITY: WARMING THE WORLD
In 2003, the combustion of coal was responsible for 36 percent of U.S. carbon dioxide emissions (CO2).2 CO2 is regarded by most scientists as the largest contributor to global warming. Peabody Energy is the largest coal company in the world, selling 227 million tons of coal in 2004 – roughly 25 percent of national consumption – and generating revenue of $3.6 billion.3

The accumulation of heat trapping gases in the atmosphere caused by burning fossil fuels - like coal - has caused significant changes to our natural systems, including the acceleration of melting of glaciers in the Arctic, and the change of natural ranges for many plant and animal species.4 Scientists expect these effects to increase and speed-up over time as carbon dioxide, methane, and other “greenhouse gases” continue to accumulate in the atmosphere.

Faced with the overwhelming scientific evidence of global warming, responsible corporations might want to determine what they could do to mitigate contributions to a problem that could negatively affect billions of people on Earth. Peabody, however, has elected to go in a different direction. Instead of working with the global community to lessen its contribution to global warming, it has sought to discredit the science saying that global warming is a man-made problem.

FUELING THE SKEPTICS
If the warming of the Earth was analogous to a burning building, Peabody would be guilty of a.) attempting to discredit the person who discovered the fire and tried to alert others, b.) blocking the door so firefighters could not get in to put out the blaze, and c.) pouring gasoline on the fire to make it worse. Through its sustaining contributions to groups with names like Americans for Balanced Energy Choices (ABEC), Peabody has tried to cast doubt on the problem of global warming. Even though more than 2,000 scientists associated with the Intergovernmental Panel on Climate Change (IPCC) long ago concluded that global warming was a threat5, Peabody continues its attempts to discredit their findings.

Stephen Miller, the President of the coal industry’s Center for Energy and Economic Development, wrote in a letter to Peabody CEO Irl Engelhard about their campaign to defeat the McCain-Lieberman bill, a modest legislative attempt to address global warming:


 “Last week, we activated the Americans for Balanced Energy Choices (ABEC) citizen army to call targeted U.S. Senators, urging them to vote against this amendment … Joe Lucas, our Vice President of Communications, coordinates this activity.”6

Miller’s letter should dispel any desired impression by Peabody and others that ABEC and its professional skepticism is anything but a front for the polluting coal giants.

LEADING THE NEW COAL RUSH
At a time when the U.S. should be taking every action available to reduce global warming pollution, Peabody is leading a massive effort to increase emissions. The recent increase in natural gas prices has opened a window for energy companies to intensify their push for more coal-fired power plants. There are currently 114 proposed new coal-fired power plants. Roughly 10 percent of those are newer gasification technology that might be – but are not currently expected to be – configured to remove carbon dioxide and help curb global warming.7

At 1500 megawatts each, Peabody’s proposed Prairie State and Thoroughbred plants are among the biggest plants proposed in the new coal rush. Instead of acting as a responsible corporate citizen and looking for ways to reduce global warming emissions, Peabody has instead used old, dirty technology in their plants that fails to take the global warming pollution out of combustion gas. Rather than move forward with currently available, pollution reduction technology, Peabody has elected to go with last century technology.

HOW DAMAGING IS THE COAL RUSH?
Peabody is leading the movement towards new, dirty coal plants in the U.S. that officials at NASA’s Goddard Institute for Space Studies believe could wipe out more than half the gains that other nations are expected to make toward reducing global warming emissions under the Kyoto global warming treaty.8 Not only has the United States pulled out of the international agreement and failed to enact measures to reduce its world-leading share of global warming pollution, it is increasing emissions in a reckless manner - and Peabody Energy is leading the way.

MERCURY: ANOTHER FINE PEABODY PRODUCT
Peabody Energy has a long history of lobbying against legislative and regulatory measures to protect the public from air pollution. They have opposed several versions of the Clean Air Act, including the 1990 Amendments that capped emissions of sulfur dioxide and set tighter limits on nitrogen oxides to combat urban smog and acid rain. Opposition from Peabody and other companies delayed the enactment of those measures throughout the 1980s.

Mercury is a toxic poison that is now common in many of our lakes, rivers, and streams. Coal-fired power plants are the largest unregulated source of the airborne mercury that pollutes our waterways. Recent research has found that one-in-six women of childbearing age have mercury levels in their bloodstream that are unsafe for a fetus.9 This means that more than 600,000 children per year are put at risk of developmental problems – including autism and learning disabilities.10

Like its disinformation campaign on global warming, the Center for Energy and Economic Development and its puppet group Americans for Balanced Energy Choices have targeted coal dollars to opposing better safety standards for airborne mercury. Quoting from the Stephen Miller letter to Peabody CEO Irl Inglehard,


“Our strategy in dealing with mercury has been two-fold: prevent states from taking precipitous or unwarranted action to regulate mercury and engage in the federal rulemaking to protect the interests of coal-based electricity.”

When a good corporate citizen learns that it produces a poison so toxic it threatens pregnant women and unborn children, it might devise a strategy to protect those vulnerable populations. Not Peabody.

THOROUGHBRED: THE HORSE THAT SHOULDN’T RUN
The plans for Peabody’s Thoroughbred plant near Central City, KY are integrally flawed, starting with the astonishing fact that consent to proceed with the plant was granted without an environmental impact statement. Problems continue with the plant’s siting—Mammoth Cave National Park is located 50 miles downwind from the proposed location. Mammoth Cave is Kentucky’s only national park, contains the world’s longest cave system, and was designated an International Biosphere Reserve and World Heritage Site. Unfortunately, its air pollution is the third worst of all national parks.

With a 1,500-megawatt output, Thoroughbred would be one of the biggest plants in the Kentucky. It would burn high-sulfur coal–the dirtiest type of coal. According to Peabody, the plant’s annual emissions would include 420 pounds of mercury, 509 tons of volatile organic compounds, and more than 10,000 tons of sulfur dioxide. These pollutants would sharply increase health risks downwind, – to both visitors and wild inhabitants of Mammoth Caves, and residents of Louisville and the surrounding Jefferson County.

Jefferson County already has the distinction of being named the worst of 736 Southeastern counties for health risks caused by poor air quality.
The curious turn of events in the Thoroughbred permitting process—a flawed plant proposal accepted and approved without an impact statement—attracted the attention of journalist Michael Schnayerson as he was researching a feature story for Vanity Fair magazine on the Bush administration’s Department of Interior appointees. Schnayerson uncovered a series of donations made by Peabody Coal to the Republican Party. Over a two-and-a-half month period beginning in July 2002, as various government agencies evaluated and signed off on the Thoroughbred proposal, Peabody gave a total of $450,000 to the GOP. Peabody says the contributions had been committed to the party before the Thoroughbred permit became an issue.

How bad is the Thoroughbred plant? It has even drawn opposition from Big Rivers, another major coal producer, because they fear the new plant would worsen air quality so much that no future plants would be allowed in Kentucky.

PRAIRIE STATE: A FAILURE OF PROCESS, A VICTORY FOR CITIZENS
Plans to construct Peabody’s Prairie State plant in Illinois came to a grinding halt in late March when the U.S. EPA’s Environmental Appeals Board ruled that the State had violated key public participation requirements and sent the construction permit back for further consideration. Sierra Club and our allies have opposed Peabody’s plant near Marissa because it lacks modern pollution controls and it is less than two miles from the edge of the Greater St. Louis metropolitan area - which already violates federal air pollution standards. Additionally, the project would emit large amounts of mercury at a time when every lake, river and stream in Illinois is under a fish consumption advisory because of existing mercury levels.

Illinois initially issued Prairie State’s construction permit over the objections of the U.S. Fish and Wildlife Service, who found that the plant’s air pollution emissions would seriously harm the nearby Mingo National Wildlife Refuge in Missouri. With the EPA’s ruling, Illinois will now have to address public concerns and consider a revised permit that takes into account these serious health and environmental consequences. IEPA subsequently reissued the permit on April 29, but the issue is on hold pending the outcome of the appeal. The EPA’s decision is important in light of the national coal rush and the push to construct as many as thirteen new coal-fired power plants in Illinois over the next few years. The case is part of a larger multiple state grassroots campaign to make sure that the Peabody plant and all other new plants protect public health by fully complying with the Clean Air Act.

FAIR TREATMENT OF NATIVE AMERICANS: NOT A PEABODY PRIORITY
Peabody Energy's legacy on Black Mesa, Arizona is as dark as the coal they have mined for over 40 years on Navajo and Hopi lands near the Four Corners in the American Southwest. In the early 1960's, John Boyden helped sign the original mining contracts as a representative for the newly created Hopi Tribal Council. At the same time, he also worked as a lawyer for Peabody Coal. Since then billions of gallons of water and coal have been extracted to feed the booming energy needs of the Southwest. Despite decades of opposition from tribal members of both tribes, Peabody Energy has had its way on Black Mesa.

Thanks to a contract signed under clear conflict of interest, both tribes have received pennies on the dollar for their coal, have had culturally-significant lands destroyed, and have had billions of gallons of pristine drinking water from the underground Navajo Aquifer - that has sustained both Navajo and Hopi Tribes for centuries - taken from them.

Peabody Energy's two mines, Black Mesa and Kayenta, service two large coal-fired power plants in Arizona and California. The Kayenta mine feeds the 1500 megawatt Navajo Generating Station in Page, Arizona and the Black Mesa Mine uses the country’s only coal slurry pipeline to feed the Mohave Generating Station in Laughlin, NV. Thanks in part to a court settlement Sierra Club and other environmental groups secured in 1999, the 1500 megawatt Mojave plant is set to shut down on December 31st, 2005.

Not only is the polluting Mohave plant a threat to the health of Arizona communities, the 273-mile coal slurry line that feeds the plant is a real threat to Arizona communities. The 15-inch coal slurry line has been bursting and leaking all along the 273-mile route across Arizona since outliving its 30-year life engineered life, and has polluted numerous streams and rivers.

WATER IS LIFE
The Navajo say “To’ Enei At’e.” The Hopi say “Paatuquaatsi.” For all humans, “Water is Life.” By threatening The Navajo Aquifer (N Aquifer), the Navajo and Hopi feel that their way of life has been threatened. The N Aquifer is a large groundwater source found under Black Mesa and used by the Navajo and Hopi people as a way to survive for thousands of years. The N-Aquifer is the source of life for the Navajo and Hopi people and has sustained an agricultural and pastoral economy long before the Spanish Explorers first laid eyes on the American Southwest. N-Aquifer springs have allowed Hopi and Navajo farmers to irrigate corn, water sheep and cows, and create a thriving culture. 

Today, thanks to the Bush Administration, Peabody Energy has been allowed to keep their N-Aquifer wells pumping. The Federal Government has failed to live up to its responsibility to protect the lives and interests of the Navajo and Hopi people. In a place where ”water is life,” draining the N-Aquifer is akin to threatening the lives of those same people.

Today Peabody Coal pumps over 3,600 acre-feet (equivalent to 3,600 football fields, one foot deep) per year of pristine water from the Navajo Aquifer. It has been operating without a permit for the last 10 years under an “administrative delay” allowed by the Department of Interior. Monitoring well reports show that the water level of the N-Aquifer is dropping11. While there are viable alternatives to slurry-line coal transportation, nothing has been done to stop the emptying of this source of drinking water.

The Sierra Club’s Environmental Justice Program has worked since 2001 in Arizona to support the efforts of grassroots Navajo and Hopi communities in calling for Peabody Energy to respect their culture and lives. The Sierra Club is honored by its partnerships with several organizations that have educated their communities of Peabody Energy’s dark legacy on Black Mesa, such as To' Nizhoni Ani, the Black Mesa Water Coalition, and the Black Mesa Trust.

CONCLUSION
Peabody Energy has proven itself time and again a bad corporate citizen. In order to protect profits, Peabody risks the health of our children by increasing emissions of mercury and opposing initiatives to control its harmful effects. In order to further profits, Peabody has worked against the international threat of global warming. In order to protect profits, Peabody willfully takes the water and degrades the holy lands of Native American Nations.

The Sierra Club calls on the owners of Peabody Energy -- its shareholders – to be a force for change. As the owners, they also bear responsibility for Peabody’s ongoing offenses. We urge them to hold Peabody Energy accountable for both its own emissions and to cease efforts to block global warming legislation. We ask them to compel the company to clean up its mercury emissions that threaten the health of children. Finally, we challenge them to turn the company in a direction that respects the dignity and the resources of the Hopi and Navajo tribes at Black Mesa.

CONTACTS:
Global Warming and Energy
David Hamilton
Director, Global Warming and Energy Programs
Sierra Club
Washington, DC
202-548-6595

Air Pollution and Mercury
Bruce Nilles
Senior Regional Representative
Great Lakes Clean Air Program
Sierra Club
Madison, WI
608-257-4994

Black Mesa Water Issues
Andy Bessler
Associate Regional Representative
Environmental Partnerships Program
Sierra Club
Flagstaff, AZ
928-774-6103


1 Center for Responsive Politics, from Federal Election Commission and Congressional Lobbying disclosure records. www.opensecrets.org

2 Energy Information Administration, Annual Energy Outlook, 2005

3 Peabody Energy Annual Report, 2004

4 Arctic Council and International Arctic Science Committee, Arctic Climate Impact Assessment, p.16, and Pew Center for Global Climate Change, Observed Impacts of Global Climate Change in the U.S., November, 2004, p. 19.

5 Intergovernmental Panel on Climate Change, Climate Change 2001: The Scientific Basis, January, 2001.

6 Center for Energy and Economic Development (CEED), Letter dated June 18, 2004, from Stephen Miller to Irl Englehard released on www.heatisonline.org

7 Department of Energy, National Energy Technology Laboratory, Tracking New Coal-Fired Power Plants: Coal’s Resurgence in Electric Power Generation, March 30, 2005, pp 2-17.

8 Christian Science Monitor, “New Coal Plants Bury Kyoto,” by Mark Clayton, December 23, 2004.

9 Centers for Disease Control, January, 2003, Second National Report on Human Exposure to Environmental Chemicals

10 Derived by the Clean Air Task Force from 2000 Census fertility data and from the National Center for Health Statistics.

11 “Drawdown: Mining Water On Black Mesa,” Natural Resources Defense Council, 2001/