New York finds Peabody climate statements misleading

ALBANY - Peabody Energy, the world's biggest private-sector coal company, violated New York laws with misleading statements to investors and the public about the financial risks from climate change and potential regulatory responses, New York's attorney general said yesterday.

St. Louis-based Peabody didn't admit or deny those findings in an agreement signed Sunday, but it did agree to revise its shareholder disclosures with the Securities and Exchange Commission to describe possible future reductions in projected demand for coal. The agreement doesn't require the company to pay fines or reimburse New York for the cost of the investigation.

"As a publicly traded company whose core business generates massive amounts of carbon emissions, Peabody Energy has a responsibility to be honest with its investors and the public about the risks posed by climate change, now and in the future," Attorney General Eric Schneiderman said. His office began investigating Peabody two years ago, though it first made inquiries into the company eight years ago. It subpoenaed similar documents from Irving, Texas-based Exxon Mobil Corp. on Wednesday.

Investigators said Peabody repeatedly denied in public filings that it had the ability to predict the impact of regulation, despite internal projections that certain regulatory measures to reduce global warming from carbon emissions would cut coal sales in its primary US markets.

"In March 2013, Peabody projected that if a specific aggressive regulatory action scenario for existing power plants and future electricity generation were to be implemented in the United States, it would in 2025 reduce the dollar value of sales of Southern Powder River Basin coal by 38 percent and Illinois Basin coal by 33 percent," the agreement noted. It also cited Peabody consultants' projection that enactment of a $20 per ton carbon tax would cut coal demand as a power generation source by 38 to 53 percent by 2020 compared to 2013 levels.

Peabody said it has agreed to amend its SEC filings.

"There is no other action associated with this settlement, no admission or denial of wrongdoing and no financial penalty," Peabody said. "The company has always sought to make appropriate disclosures."

The company said it believes technology with more high-efficiency, low-emissions coal-fueled power plants and carbon capture is the bridge to a future with low emissions and rising electricity demand.

The new disclosures say, in part, that the federal Environmental Protection Agency announced final rules on Aug. 3 for regulating carbon dioxide emissions, intended by 2030 to reach a 32 percent reduction from 2005 levels. "The EPA expects the rule to have a significant impact on the demand for coal-fired electricity generation in the US and, depending upon the implementation methods adopted by the various states, we believe the rule could have a material adverse effect on our results of operations, financial condition and cash flows in future periods."