Patriot Coal Corp. (NYSE: PCX) announced Jan. 18 that it has entered into a consent decree with the Ohio Valley Environmental Coalition, the West Virginia Highlands Conservancy and the Sierra Club to resolve claims about selenium pollution under the Clean Water Act relating to Patriot’s mining activities in West Virginia.
“Selenium is an issue that many companies involved in coal mining must confront,” said Patriot President and CEO Richard Whiting. “Today’s settlement by Patriot represents a strategic response to this challenging issue. We are pleased that this settlement provides a comprehensive framework for Patriot to address selenium across our properties going forward. We believe the consent decree serves the interests of both the public and our stockholders.”
Patriot has agreed to a comprehensive plan to settle this February 2011 lawsuit that provides for needed time and flexibility in the development, selection and implementation of emerging technologies to meet compliance deadlines in the future. To resolve claims related to the consent decree, the company will pay $7.5m in civil penalties, to be allocated between the federal government and the West Virginia Land Trust (WVLT) for land preservation projects within the Kanawha River and Guyandotte River watersheds.
The consent decree, which has been filed with the U.S. District Court for the Southern District of West Virginia, is subject to a public comment period and must be approved by the court before it becomes effective.
Patriot is one of a number of coal producers in this region that have run afoul lately of complaints and litigation lodged by environmental groups over high concentrations of selenium in water runoff from mine sites. Selenium is actually beneficial to human health in minute quantities, but harmful in larger concentrations.
The defendants in the case are Patriot and its Apogee Coal Co. LLC, Catenary Coal Co. LLC and Hobet Mining LLC subsidiaries. Under the consent decree, the defendants have to pay a civil penalty of $750,000 to the United States and undertake a Supplemental Environmental Project (SEP). The companies have to turn over $6.75m to the West Virginia Land Trust in order to fund the SEP.
Said WVLT in a letter attached to the consent decree: “It is our goal to acquire or preserve at least 20,000 acres of forested and riparian area under the terms of this and previous SEP agreements. WVLT has begun the process of identifying a ‘portfolio of opportunities’ or lands that represent potential projects in which land owners have expressed an interest in either selling or donating their interests to a qualified conservation organization. These projects, while not finalized, represent some of the work we will bring to fruition under the terms of this and previous SEP agreements. As an example, we are working to secure a conservation easement acquisition of 10,700 forested acres in Braxton, Clay, Nicholas, Lincoln, Kanawha, and Webster Counties that are under the ownership of one land holding company.”
Patriot units to limit selenium at specific sites
Under their respective WV/NPDES water permits covered by the consent decree, each Patriot defendant has to select and install selenium treatment technologies at each covered water outfall so that these outfalls will achieve compliance with selenium discharge limits contained in the permits by a certain compliance date. If a defendant believes that compliance is or will be achieved without additional treatment at one or more covered outfalls, it has to indicate that on or before the relevant technology selection date. The defendants can choose from a list of available treatment technologies that will be created later, closer to the time the technology for any given project has to be picked.
A side deal in the consent decree covers a dispute over a Section 404 Clean Water Act issued by the U.S. Amry Corps of Engineers. Patriot has agreed to cause its affiliate Jupiter Holdings LLC to waive those rights it holds under a Section 404 permit issued by the Corps in March 2007 relating to the Callisto surface mine that would otherwise allow Jupiter to construct the four additional valley fills contemplated by the mine plan. To accomplish the waiver, Patriot and Jupiter will surrender or otherwise modify the Section 404 permit to eliminate the four additional valley fills as specified disposal sites under Section 404 of the CWA, while maintaining Patriot’s obligations with regard to the previously constructed valley fill at the Jupiter Callisto mine.
Patriot and Jupiter agree to forego the surface mining of any coal on the Callisto property pursuant to Jupiter’s state-issued surface mine mining permit (S-5009-00) other than that which is incidental to their reclamation obligations so as to avoid long-term discharges of selenium in excess of the water quality standard. Patriot and Jupiter will seek a modification of the surface mining permit to delete those acres from the permit that will remain undisturbed as a result of the consent decree while otherwise complying with existing reclamation obligations at this mine.
Patriot also agreed to seek a modification of the WV/NPDES permit for the Callisto surface mine to delete from the permit those outfalls that are associated with the areas that will remain undisturbed. Patriot agreed not to apply for new permits to surface mine the property covered by the Corps permit and the S-5009-00 permit in the future.
West Virginia Department of Environmental Protection records show that permit S-5009-00 was issued in November 2001, covers a current 1,195 acres and is on approved inactive status. The mine site is in Boone County, with the permit covering surface mining of the Coalburg coal seam. As of a Nov. 3, 2011, DEP inspection report, the most recent for this site, 265 acres of the permit area had been disturbed up to that point and 72 acres reclaimed. Patriot’s Thunderhill Coal is the approved operator under this permit, which is held by Jupiter Holdings.
The U.S. Mine Safety and Health Administration listing for Callisto is under Thunderhill Coal. MSHA data shows that mine as currently “nonproducing,” with last production in the first half of 2009, when the mine turned out 12,755 tons. Callisto went into production in 2001, had peak production of 694,145 tons in 2002, and then had generally declining output in later years before it was finally shut down in early 2009.
Patriot Coal is a leading producer and marketer of coal in the eastern United States, with 14 active mining complexes in Appalachia and the Illinois Basin. The company ships to domestic and international electricity generators, industrial users and metallurgical coal customers.