Patriot Coal has agreed to restrictions on its West Virginia surface mining operations in exchange for more time to install pollution control technology required under previous legal settlements.
Following Patriot's Chapter 11 bankruptcy filing in July 2012, the company approached the Sierra Club, Ohio Valley Environmental Coalition, and West Virginia Highlands Conservancy regarding the time frame set by the courts to install selenium treatment technology, according to information from the Sierra Club.
The environmental groups successfully sued Patriot in 2010 and the court ordered Patriot to install selenium treatment technology at its Hobet 22 mine in Boone County by May 2013, according to the Sierra Club. As part of the proposed agreement announced Thursday, the company will have until August 2014 to install the technology at the site.
A second lawsuit brought by the environmental groups in 2011 resulted in a 2012 settlement requiring Patriot to bring 42 outlets discharging from 10 West Virginia mines into compliance, according to the Sierra Club. Under Thursday's proposed agreement, the deadline for these outlets would be extended by one year.
"This settlement agreement allows Patriot to defer up to $27 million of compliance-related cash outlays from 2012 and 2013 into 2014 and beyond, which improves our liquidity as we reorganize our company and increases the likelihood that we will emerge from the Chapter 11 process as a viable business," Patriot President and CEO Bennett Hatfield said in a statement.
As part of the proposed agreement, Patriot will withdraw two applications for Clean Water Act Section 404 permits pending before the US Army Corps of Engineers and surrender the remaining rights under a third permit. The company has also agreed to not apply for any additional large-scale surface mine permits and will not open any new stand-alone surface mines, according to information from the environmental groups. Other stipulations include retiring infrastructure and equipment needed for mountaintop mining and a $500,000 donation to a West Virginia non-profit organization, according to the groups.
"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 honor its obligations to its retirees and workers," OVEC's Dianne Bady said in a statement.
Sierra Club Executive Director Michael Brune said the proposed agreement was "a major step" toward ending mountaintop mining.
The proposed agreement does allow Patriot to move forward with a new metallurgical coal mine. A CWA Section 404 permit is pending for the project and the environmental groups reserved the right to challenge the permit if the US Environmental Protection Agency identifies water quality concerns, the groups said in the statement.
"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 minimized," Hatfield said in the statement.
The proposed agreement is subject to the approval of the US District Court for the Southern District of West Virginia and the Bankruptcy Court for the Southern District of New York, Patriot said in its statement.
