Patriot Coal Commits to End Its Mountaintop Removal in Appalachia

Case Updates:

November 15, 2012

Sierra Club, Ohio Valley Environmental Coalition, and West Virginia Highlands Conservancy have reached an agreement with Patriot Coal Corporation – one of the largest surface coal mine operators in Appalachia – that requires the company to phase out mountaintop removal mining and all other forms of large scale surface mining. In exchange, the groups have agreed to extend the deadlines, secured through previous litigation, by which the company must install selenium treatment technology.

Background on Previous Selenium Enforcement Litigation

Patriot Coal Corporation is one of the three major mountaintop removal coal mining operators in Appalachia, along with Alpha Natural Resources and Arch Coal.

Over the last several years, Sierra Club, Ohio Valley Environmental Coalition, and West Virginia Highlands Conservancy – represented by attorney Joe Lovett and his associates at Appalachian Mountain Advocates – have brought successful Clean Water Act enforcement lawsuits against Patriot and its subsidiaries for unlawful selenium discharges from various West Virginia coal mines. Selenium is a toxic pollutant that can cause significant harm to fish and other aquatic life.

In August 2010, Judge Robert Chambers of the federal District Court for the Southern District of West Virginia held an evidentiary hearing on selenium claims raised in lawsuits against Patriot’s Hobet and Apogee subsidiaries. In October 2010, Judge Chambers ruled in the groups’ favor, ordering Patriot to install treatment technology at the Apogee facility by March 2013, and at the Hobet facility by May 2013. The court also ordered Patriot to post a letter of credit for $45 million to cover the cost of treatment at the two mines.

In February 2011, the groups – again represented by Appalachian Mountain Advocates – filed a new lawsuit against Patriot and its Hobet, Apogee, and Catenary subsidiaries regarding selenium violations at 42 outlets discharging from ten West Virginia mines. In January 2012, the groups reached a settlement with Patriot that required the company to bring discharges from all 42 outlets into compliance with its selenium limits on a set schedule.

On July 10, 2012, Patriot filed for Chapter 11 bankruptcy, indicating its intent to restructure and thus continue operations. Shortly thereafter, Patriot approached the groups seeking permission to extend the schedules under which it is required to install the selenium treatment technology.

2.         The Agreement

In exchange for the groups’ agreement to allow Patriot to extend the deadlines for installing selenium treatment technology, Patriot has committed to phase out over time its mountaintop removal and all other forms of large-scale surface mining in Appalachia. Under the terms of the agreement, “large-scale surface mining” is defined as “surface mining requiring an individual permit under Section 404 of the Clean Water Act.” Large-scale surface mining does not include mining operations attendant to underground mining (e.g. “faceups,” haul roads, preparation plants, or refuse disposal). Patriot has also agreed to limit its total production of coal from all forms of surface mining – both large and small scale – to 3 million tons a year, or approximately ten percent of its current annual production, beginning in 2018. Interim caps will require Patriot to reduce its surface mining production to 6.5 million tons per year by 2014, 6 million tons per year by 2015, and 5 million tons per year by 2017.

Specifically, Patriot will:

Retire significant and expensive infrastructure that is essential for mountaintop removal mining, including immediately retiring the Catenary drag line and retiring the Hobet drag line by the end of 2015.
Agree not to allow infrastructure such as haul roads and coal preparation plants to be used by other mining companies in Central Appalachia, except as required by existing agreements and arrangements.
Relinquish its remaining rights under a Clean Water Act section 404 fill permit that was already issued for the Colony Bay complex.Withdraw two section 404 permit applications – one for a Hobet Coyote mine and one for a Colony Bay mine – currently pending before the Army Corps. (Maps showing the location and extent of these three permits can be found here, here, here, and here).
Commit not to file any new applications for section 404 permits for large-scale surface mines.
Commit not to open any new stand-alone surface mines, with the exception of the Huff Creek metallurgical coal mine for which an application for a section 404 permit is currently pending. Provided, however, that the groups retain the right to challenge the section 404 permit for the Huff Creek mine if EPA indicates in writing that it has concerns about the mine’s impacts on water quality.
Limit small scale surface mining to facilities associated with existing and planned underground mining complexes.
Commit that coal production from remaining surface mining will not exceed 3 million tons per year by 2018, and that production from surface mines will never exceed that amount.
Donate $500,000 to a West Virginia non-profit organization to be identified by the parties.

Finally, Patriot released the following statement:

“Patriot Coal has concluded that the continuation or expansion of surface mining, particularly large scale surface mining of the type common in central Appalachia, is not in its long term interests. Today’s proposed settlement commits Patriot Coal to phase out and permanently exit large scale surface mining and transition our business primarily toward underground mining and related small scale surface mining.

Patriot Coal recognizes that our mining operations impact the communities in which we operate in significant ways, and we are committed to maximizing the benefits of this agreement for our stakeholders, including our employees and neighbors. We believe the proposed settlement will result in a reduction of our environmental footprint.

This settlement is consistent with Patriot Coal’s 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.

Patriot Coal urges the Court to approve the settlement because it strengthens the Company’s ability to continue operating with our nearly 4000 employees, and significantly increases the likelihood that we will emerge from the chapter 11 process as a viable business, able to satisfy our environmental and other obligations.”

In exchange, Sierra Club, Ohio Valley Environmental Coalition, and West Virginia Highlands Conservancy have agreed to:

Extend the compliance schedule laid out in the court’s October 2010 final order for the Hobet mine by 15-months, allowing the company until August 1, 2014 to complete installing treatment technology and come into compliance with water quality standards.
Allow Patriot to reduce the amount of the letter of credit required by the October 2010 final order from $45 million to a lower amount that Patriot can establish is sufficient to complete both projects.
Extend the compliance schedules for all 42 outlets covered under the March 15, 2012 settlement by 12 months.