A federal judge on June 6, at the request of the parties, dismissed a lawsuit filed by C.L. Ritter Lumber against the Consolidation Coal unit of CONSOL Energy (NYSE: CNX) in a dispute over disposal of mine wastewater onto C.L. Ritter properties in southwest Virginia.
Judge James Jones in the U.S. District Court for the Western District of Virginia noted in the order that the parties had settled the case, and that they had asked that it be dismissed with prejudice, but he didn’t say what that settlement entailed. The suit was first filed in March 2011 and a jury trial had been scheduled for December of this year.
Said CONSOL Energy about this lawsuit in its April 30 Form 10-Q filing: “On March 1, 2011, the Company was served with a complaint instituted by C. L. Ritter Lumber Company Incorporated against Consolidation Coal Company (CCC), Island Creek Coal Company (ICCC), CNX Gas Company LLC, subsidiaries of CONSOL Energy Inc., as well as CONSOL Energy itself in the Circuit Court of Buchanan County, Virginia, seeking damages and injunctive relief in connection with the deposit of untreated water from mining activities at CCC’s Buchanan Mine into nearby void spaces at one of the mines of ICCC. The suit alleges damages of between [$34m] and [$430m] for alleged damage to coal and coalbed methane, as well as breach of contract damages. We have removed the case to federal court and filed a motion to dismiss, largely predicated on the statute of limitations bar. The trial judge ruled that the issue of the applicability of the statute of limitations bar can only be addressed after discovery. There have been settlement discussions and we have established an accrual to cover our estimated settlement liability for this case. This accrual is immaterial to the overall financial position of CONSOL Energy and is included in Other Accrued Liabilities on the Consolidated Balance Sheet.”
In its original lawsuit, C.L. Ritter said that Consolidation Coal was dumping wastewater onto the nearby Beatrice mine property, which Island Creek Coal had mined up to 1986, and the VP 1 mine property, which Island Creek had operated until 1998. C.L. Ritter said there are coal reserves left from both mines, including a tract east of VP 1 that could have been “easily accessed” from VP 1. C.L. Ritter said that the wastewater dumping was endangering the future viability of those coal reserves, plus production of coalbed methane and other gases from its properties.
C.L. Ritter accused Consolidation Coal of “secretly” deciding to dump water mixed with toxic materials out of the Buchanan mine onto the Beatrice property, since it couldn’t be discharged into area streams. The coal leases held by Island Creek Coal, while still in force, did not allow this dumping, C.L. Ritter said. The lawsuit said “billions of gallons” of this polluted water had been dumped into the Beatrice property, with Consolidation Coal then shifting the dumping to the VP 1 property when it began running out of capacity to do so at Beatrice. On the unmined VP 1 tracts alone, this action has “sterilized” over 2.3 million tons of very valuable metallurgical coal reserves, C.L. Ritter said.
VP 1 (VP is an acronym for Virginia Pocahontas) was a deep mine working a split of the Pocahontas seam. Buchanan currently produces a premium low-vol met coal, also out of a split of the Pocahontas seam. U.S. Mine Safety and Health Administration data shows that Buchanan, officially known as Buchanan No. 1, produced 996,152 tons in the first quarter of this year and nearly 5.7 million tons in all of 2011.