Federal judge halts coal mining by Leeco on disputed property

A federal judge on Sept. 18 stopped the Leeco Inc. unit of James River Coal (NASDAQ: JRCC) from mining on an eastern Kentucky coal site while environmental groups appeal their earlier loss in that court to the U.S. Sixth Circuit Court of Appeals.

Kentuckians for the Commonwealth and the Sierra Club have filed a notice of appeal of an Aug. 23 decision out of the U.S. District Court for the Western District of Kentucky. The court upheld the U.S. Army Corps of Engineers’ July 2012 decision to issue a Section 404 permit under the Clean Water Act to Leeco.

The permit authorizes Leeco to discharge dredged or fill material into tributaries of Stacy Branch and Yellow Creek of Carr Creek, which are “waters of the United States” under the Clean Water Act and accompanying regulations. These activities are part of Leeco’s nearby surface mining operations.

The court’s Aug. 23 decision denied plaintiffs’ motions for summary judgment and granted defendants’ motions for summary judgment in part. It determined that the Corps adequately analyzed the issues before it prior to issuing the permit and that the Corps did not act arbitrarily and/or capriciously in issuing the permit.

The court rejected plaintiffs’ argument that the Corps violated the National Environmental Policy Act (NEPA) and the Clean Water Act (CWA) by not considering evidence of risk to public health from coal mining activities. The court also rejected plaintiffs’ argument that the Corps errantly determined that the destruction of streams at the mine site will not significantly degrade waters of the United States.

Plaintiffs then moved for an injunction pending appeal to direct the Corps to suspend Leeco’s permit and prohibit Leeco from dredging or filling waters of the United States while plaintiffs’ appeal is pending. On Aug. 30, the court entered a temporary injunction directing the Corps to temporarily suspend the permit. In the Sept. 18 decision, the judge decided to extend that injunction until the appeals court case is resolved.

Judge says ‘irreparable harm’ test falls in favor of the plaintiffs

“The Court finds that Plaintiffs will be irreparably harmed if an injunction is not granted for the appeal’s pendency,” said the Sept. 18 ruling. “Not only may Leeco’s activities disturb Plaintiffs’ members who work, live, and recreate near these sites, they may also destroy the streams themselves.”

Leeco had offered to restrict its use of the Section 404 permit to approximately 2,900 feet of waters pending appeal, reducing the amount of mining and stream impacts. However, this proposal does not prevent permanent damage to the waters at issue – it only limits it, the judge ruled.

Leeco argued that a long-term injunction would cause it to incur substantial economic harm. If its Section 404 permit is suspended, it will be forced to either refrain from any mining at the Stacy Branch site altogether, or, if it does conduct such mining, to incur unrecoverable expenses in avoiding disturbance to jurisdictional streams. Leeco further argued that an injunction would reduce both the amount of wages and taxes that it would otherwise pay. It said that an injunction would lessen the mine’s value, as the company would permanently lose access to much of the on-site coal and that the mine’s life would be reduced. Leeco pointed to costs it would incur from idling and restarting operations and from fulfilling its sale commitments with more expensive coal. The company also argued that an injunction would diminish its ability to respond to a potential rise in the coal market.

“Such economic loss to Leeco, either real or speculative, and the resultant effect on its employees is certainly regrettable,” Judge Thomas Russell ruled. “However, ‘[p]otential monetary damage does not constitute irreparable harm.’”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.