Patriot Coal modifies clean water settlement

HUNTINGTON – Patriot Coal and three of its subsidiaries are modifying a settlement reached with environmental groups over Clean Water Act allegations relating to surface mining.

U.S. District Judge Robert Chambers approved the modification, announced in November, on Jan. 9.

“While Defendants do not admit any of the alleged violations, this modified consent decree represents a significant step in bringing Defendants’ activities into compliance with federal law,” Chambers wrote.

“The court notes the complex issues presented in these two cases and commends counsel on both sides for their ability to reach a resolution in this difficult matter.”

In addition to St. Louis-based Patriot Coal, which is going through bankruptcy reorganization, named as defendants were subsidiaries Apogee Coal Company, Catenary Coal Company and Hobet Mining, all operating in West Virginia.

The U.S. Government indicated on Dec. 14 that it had no objects to the agreement, and a 45-day comment period has now expired. On Dec. 20, the parties filed a joint motion to enter the modified settlement.

The deadline for compliance with selenium effluent limitations at outfalls under a Hobet permit will be extended from May 2013 to August 2014.

Other compliance schedules will be extended by 12 months.

The defendants have already paid a $750,000 to the United States as a civil penalty. They also paid $6,750,000 to the West Virginia Land Trust to fund an environmental project that is designed to restore riparian areas and preserve land within the Kanawha River and Guyandotte River watersheds.

A $500,000 donation to a West Virginia non-profit organization is also required.

In addition, the companies, as part of the new settlement, agreed not to submit any new applications for CWA permits to construct or initiate any new large scale surface mining.

The companies may continue surface mining at existing facilities and renew permits for those projects.

“This settlement agreements allows Patriot to defer up to $27 million of compliance-related cash outlays from 2012 and 2013 into 2014 and beyond, which improves our liquidity as we reorganize our company and increases the likelihood that we will emerge from the Chapter 11 process as a viable business,” Patriot president and CEO Bennett Hatfield said in November.

“Importantly, this proposed settlement allows Patriot to continue mining according to existing permits and is consistent with our long-term business plan to focus capital on expanding higher-margin metallurgical coal production and limiting thermal coal investments to selective opportunities where geologic and regulatory risks are minimized.”

The lawsuit was filed in 2009 by the Ohio Valley Environmental Coalition, the West Virginia Highlands Conservancy and the Sierra Club.

The groups also sued Coal-Mac and Mingo Loan Coal, two former subsidiaries of Massey Energy, leading to a $1.8 million settlement reached in 2011. That same year, Alpha Natural Resources purchased Massey.

Also sued was Argus Energy, which operates a surface mine in Mingo County. That case was settled in May.

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.