Chambers finds Patriot Coal in contempt

By Steve Korris | Oct 14, 2010


HUNTINGTON – U.S. District Judge Robert Chambers suspects Patriot Coal deceived him about water treatment but he doesn't find Patriot in contempt on that suspicion.

He finds it in contempt for "lack of focus and diligence" in complying with a consent decree he signed last year, according to an opinion he issued on Oct. 8.

He kept a commitment he made in a brief contempt order on Sept. 1, promising to set out authority for his decision and the $45 million price tag he stamped on it.

Patriot subsidiaries Apogee Coal and Hobet Mining must spend the money to reduce discharges of selenium from mines, and Chambers must approve every dollar.

He wrote that he wouldn't have found Apogee Coal in contempt simply for failure to reach its goals if it had exercised good faith and diligence in the effort.

"Instead, Defendant dug itself into a hole such that complying with the consent decree became impossible," he wrote.

It underestimated flow rates and failed to use reasonably judgment in estimating the size and cost of treatment systems, he wrote.

He detected "a dramatic (and possibly suspicious) change in the company's assessment of how many gallons per minute of discharge would be required to achieve compliance."

"This discrepancy arguably shows an intent to purposely underestimate the amount necessary to be treated, possibly indicating a lack of good faith in the attempt to comply," Chambers wrote. "To find Apogee in contempt, the court is not required to conclude that Apogee acted with any deceptive intent."

Patriot owners hadn't waited for the long version before challenging the order. They filed notice at the U.S. appeals court in Richmond, Va., on Sept. 30.

While they await action in Richmond, Chambers expects them to start spending from a $45 million letter of credit they delivered on Sept. 22.

He wrote that they can draw on it when he finds expenditures reasonably necessary to meet or complete the schedule for treatment systems.

The decree apparently resolved selenium suits of Ohio Valley Environmental Coalition and West Virginia Highlands Conservancy against Apogee Coal and Hobet Mining.

This year, the companies moved to modify the decree and the nature groups moved to find Apogee Coal in contempt.

Chambers held trial on the motions from Aug. 9 to 12.

"After trial, the parties represented that they were close to resolving the matter and requested a stay of closing arguments and ruling," he wrote.

He granted them time to write a new decree, but negotiations collapsed.

He heard closing arguments on Aug. 31, and wrote a short order the next day denying modification of the decree and finding Apogee Coal in contempt.

In the long order that followed, he wrote that selenium impacts reproduction of aquatic species, impairs development and survival of fish, and damages gills and other organs.

"It can also be toxic to humans, causing kidney and liver damage, and damage to the nervous and circulatory systems," he wrote.

He wrote that surface mining can increase selenium concentration by exposing selenium bearing rock and soil to weather.

He wrote that runoff carries it downstream to lakes, reservoirs and waterways.

He wrote that technology for its capture and removal is in the pilot stage, but he rejected Patriot's claim that its failure to comply resulted from lack of technology.

"Apogee's failure to use reasonable diligence substantially diminished its ability to achieve compliance," he wrote.

He wrote that it relied on "zero valent iron" treatment despite poor results and against recommendations of consulting engineers.

"It seems that Apogee chose ZVI from the beginning and wore blinders throughout testing," he wrote.

Apogee didn't take steps to determine the amount and variation of flow so it could consider alternatives, he wrote.

"Storm water analysis, examining the concentration of selenium during storms, could have been performed early on," Chambers wrote. "Defendant is only now able to do what should have been done a year or more ago."

He ordered Apogee Coal and Hobet Mining to install specific treatment systems by 2013.

He ordered Apogee Coal to submit a narrative describing the time and actions needed to design, install and operate a system, by the following Monday, Oct. 11.

On Monday, Apogee Coal asked for 30 days.

As of Wednesday, Oct. 13, Chambers had not extended the deadline.

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