Insolvent US coal miner agrees to stop mountaintop-removal mining

15th November 2012 By: Henry Lazenby - Creamer Media Deputy Editor: North America

TORONTO ( – Bankrupt US coal miner Patriot Coal on Thursday became the first miner to cease large-scale mountaintop-removal coal mining in central Appalachia in exchange for more time to comply with the Clean Water Act at several of its central Appalachian mines.

As the company is preparing for Chapter 11 litigation, it had reached an agreement with three environmental groups that had sued over water pollution from its West Virginia operations.

The agreement was presented for consideration to Judge Robert Chambers of the US District Court for the Southern District of West Virginia, and had its roots in water pollution lawsuits filed by environmental protection groups the Sierra Club, the Ohio Valley Environmental Coalition (OVEC) and West Virginia Highlands Conservancy.

Mountaintop-removal coal mining is an economical but devastating form of strip mining unique to West Virginia, Virginia, Kentucky and Tennessee. Coal companies blast apart mountain ridge tops to expose multiple coal seams and then dump the waste in streams, creating so-called valley fills.

Patriot Coal said it had concluded that continuing and expanding its surface mining, particularly large-scale surface mining of the type common in central Appalachia, was 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 recognises that our mining operations impact the communities in which we operate in significant ways, and we are committed to maximising the benefits of this agreement for our stakeholders, including our employees and neighbours. We believe the proposed settlement will result in a reduction of our environmental footprint,” president Ben Hatfield said in court.

Under the terms of the agreement, Patriot would move away from, and ultimately cease, mountaintop removal and all other forms of large-scale surface mining in Appalachia, in return for being granted additional time to install selenium treatment plants at several of its West Virginia mines.

Patriot had also agreed to retire significant infrastructure required to perform mountaintop-removal coal mining, including the dragline at its Catenary mine complex, which would be retired immediately, and the dragline at its Hobet mine complex, which would be retired in 2015.

Patriot would also withdraw two applications for Clean Water Act Section 404 valley fill permits currently pending before the US Army Corps of Engineers, and would surrender its remaining rights under a third permit.

Further, Patriot has committed to not apply for any additional large-scale surface mine permits, to not open any new standalone surface mines, and to only conduct small-scale surface mining in conjunction with existing and planned underground mining.

Under the agreement, Patriot would be allowed to move forward with its plans to open one new metallurgical coal mine for which a Section 404 permit application is pending. Patriot would also be required to donate $500 000 to a West Virginia nonprofit organisation to be identified by the parties.

In return, the environmental activists had agreed to file a joint motion with Patriot that would extend the time the company is given to comply with court-ordered selenium controls at the Hobet mine by 15 months, and the coalition would also allow Patriot to extend the date of compliance for selenium treatment at 42 other outlets at other mines and facilities by 12 months.

St Louis-based Pariot said an extension to the deadline for compliance with selenium effluent limitations at outfalls under the Hobet 22 permit, from May 2013, until August 2014, would allow it to defer up to $27-million of compliance-related capital expenditures from 2012 and 2013 into 2014 and beyond.

Patriot believed this would improve the company’s liquidity as it reorganised itself and increased the likelihood that Patriot would emerge from the Chapter 11 process as a viable business.

"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 minimised,” CEO Bennett Hatfield said in a statement.

“We hope that this agreement, while holding Patriot responsible for its legacy of mining pollution, puts the company in a strong enough financial condition, through its underground mining, that it can honour its obligations to its retirees and workers,” OVEC’s Dianne Bady said.

“This is an historic moment for people hardest hit by mountaintop-removal coal mining. Patriot Coal may be the first company to cease mountaintop-removal mining but, because of the tireless efforts of committed volunteers and community organisations, it certainly won’t be the last,” Sierra Club executive director Michael Brune said.

The settlement remained subject to approval by the US District Court for the Southern District of West Virginia following a public comment period, as well as approval by the Bankruptcy Court for the Southern District of New York.