MORGANTOWN, W.Va. (AP) - Bankrupt Patriot Coal will become the first U.S. operator to stop large-scale mountaintop removal mining in Central Appalachia under a historic agreement with three environmental groups.
The deal was struck Thursday and presented to a federal judge in Huntington.
It stems from pollution lawsuits filed by the Sierra Club, Ohio Valley Environmental Coalition and West Virginia Highlands Conservancy.
St. Louis-based Patriot must resolve litigation during its bankruptcy proceedings.
It will idle some equipment immediately, phasing out large-scale strip mining. Going forward, it agrees to do only small-scale surface mining near planned or existing underground operations.
In exchange, it gets more time to install selenium treatment systems at several mines.
"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," stated Patriot President & Chief Executive Officer Bennett K. Hatfield. "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."
"We greatly appreciate the inimitable work of Appalmad, Sierra Club, OVEC and WVHC in bringing about this significant move. However, we cannot afford to rest. Health damage continues to climb as Alpha Natural Resources and other coal companies persist in blasting mountains to ashes, spreading silica dust and elevated levels of PAH toxins across our communities, contaminating our air, our water and our garden soils," said Bo Webb, ACHE campaign coordinator. "This admission and action by Patriot Coal is a clear mandate to the US Congress to immediately pass the ACHE Act into law; providing an immediate pause on all new mountaintop removal permits and a health study to address the effects of MTR on human beings. Until then, mountaintop removers will continue to jeopardize thousands of citizens' lives while state agencies do nothing to protect us. We've been exposed to hazards such as toxic blasting dust for years, and are now experiencing the long term health impacts. I'm tired of watching my family and neighbors die."
Patriot Coal has issued 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.
The agreement caps how much coal Patriot can produce from surface mines and requires it to withdraw two valley-fill permit applications.
"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," said OVEC's Dianne Bady.
"We've been saying for many years that if companies had to pay the real costs of mountaintop removal, it would not be economically feasible," said Cindy Rank of the West Virginia Highlands Conservancy. "Hopefully, it's now become clear that when coal companies are required to prevent illegal selenium pollution and pay the costs for cleanup themselves it's simply doesn't make economic sense to continue this destructive form of mining."
"It's heartening any day we learn that a major player decides that mountaintop removal is not in the best interest - of the company or of our mountains, streams, and communities," said Jim Sconyers, Chair of the West Virginia Sierra Club. "We look forward to the day when full implementation of this agreement is achieved."
The agreement was announced during a proceeding before Judge Robert Chambers of the U.S. District Court for the Southern District of West Virginia.