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Patriot Coal agrees to major selenium cleanup

Read the deal at http://blogs.wvgazette.com/coaltattoo/

CHARLESTON, W.Va. -- Patriot Coal has agreed to a major legal settlement that will require the company to clean up dozens of illegal discharges of toxic selenium at three major mining complexes in Southern West Virginia, according to court records filed Wednesday.

Attorneys for the Sierra Club and other groups negotiated the deal with Patriot to resolve ongoing litigation following a September 2010 federal court ruling that began forcing coal operators to deal with selenium violations around the state's coalfields.

The Patriot deal, outlined in a consent decree filed after the financial markets closed for the day, is the most significant in a series of water pollution settlements worked out by citizen organizations in the last year.

"This is the culmination of years of work on this issue," said attorney Joe Lovett of Appalachian Mountain Advocates, which represented citizen groups in the case. "We're very pleased that the coal industry will have to pay the costs of its business and clean up polluted waters."

Selenium discharges have become a growing concern for the industry -- and a frequent target for environmental groups -- in the wake of government studies and recent scientific papers outlined widespread violations and links to deformed fish downstream from major mountaintop removal operations.

The Patriot deal covers 43 pollution outlets associated with 10 water discharge permits at three of Patriot's mining complexes, Hobet 21 along the Boone-Lincoln county line, Samples in Kanawha County, and Ruffner in Logan County.

Under the settlement, Patriot must construct and operate new selenium treatment systems that will end ongoing water quality violations. Discharges must be brought into compliance with pollution limits in phases over the next two to five years, based on the water and pollution flow. Smaller outlets must be cleaned up first, with a limited number of larger discharges having the latest deadlines.

"Selenium is an issue that many companies involved in coal mining must confront," said Patriot CEO Richard Whiting. "Today's settlement by Patriot represents a strategic response to this challenging framework. We believe the consent decree serves the interests of both the public and our stockholders."

Patriot will also pay $750,000 in fines to the federal government and contribute $6.75 million to the West Virginia Land Trust.

The deal also includes a promise that Patriot will drop any future plans to mine on a controversial, permit at its Jupiter-Callisto Mine in Boone County, near the home of anti-mountaintop removal activist Maria Gunnoe. The deal needs approval from U.S. District Judge Robert C. Chambers and from the Justice Department.

It's not clear how much the selenium treatment will cost Patriot.

Financial disclosures from the company indicate that court-mandated treatment systems already under construction to clean up four other discharge outlets at two Patriot mines will cost the company at least $95 million.

One Patriot financial disclosure, filed with the U.S. Securities and Exchange Commission, estimated the company's total selenium treatment liabilities at nearly $400 million over 30 years. As of Sept. 30, 2011, Patriot said it had recorded a $143 million liability for selenium treatment, but it's not clear that figure accounts for more advanced -- and expensive -- treatment the settlement could require.

Litigation by the Sierra Club, the Ohio Valley Environmental Coalition and the West Virginia Highlands Conservancy has led to advances in selenium treatment technologies, pushing for actions state regulators had tried to help the industry delay.

Citizen groups pursued those cases vigorously, armed with a ruling by Chambers that held Patriot in contempt for not moving quickly enough to end selenium violations. Alpha Natural Resources agreed in one deal to treat selenium at 15 discharge outlets and Arch Coal pledged in another to clean up violations at five pollution outlets.

"Although treatment may be sufficient to address these existing selenium problems, ultimately the industry and regulators need to recognize that it's not appropriate to mine coal where disturbing selenium laden rock strata will release harmful amounts of pollution," said Cindy Rank, mining chairwoman for the West Virginia Highlands Conservancy.

Selenium, a naturally occurring element found in many rocks and soils, is an antioxidant needed in vary small amounts for good health. In slightly larger amounts, selenium can be toxic. Selenium impacts the reproductive cycle of many aquatic species, can impair the development and survival of fish, and can damage gills or other organs of aquatic organisms subject to prolonged exposure. It can also be toxic to humans, causing kidney and liver damage, as well as damage to the nervous and circulatory systems.

In 2003, a broad federal government study of mountaintop removal mining found repeated violations of water quality standards for selenium. The following year, a U.S. Fish and Wildlife Service report warned of more selenium problems downstream from major mining operations. One report from a top selenium expert has warned the pollution from Patriot's Hobet 21 site has left the Mud River ecosystem "on the brink of a major toxic event."

Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.


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