HUNTINGTON, W.Va. -- In a move that could help it emerge from bankruptcy, Patriot Coal has reached an "agreement in principle" with environmental groups concerning its massive liability for cleaning up selenium pollution from mountaintop removal mines in West Virginia, a federal judge was told Thursday.
Lawyers for Patriot and the Ohio Valley Environmental Coalition provided U.S. District Judge Robert C. Chambers no details of their deal, but said they expect to make a public announcement within a month.
The agreement apparently was reached after extensive private negotiations in which "the parties have discussed a range of options that might be considered during Patriot's reorganization," court records show.
Patriot already was under court order to begin treating selenium at one mining operation and, in January, agreed to a broader settlement with citizen groups that covered two other mountaintop removal complexes.
Court records show the two sides have been negotiating "several issues," including changing timelines for eliminating selenium violations and Patriot's "broader obligations" under its selenium settlement.
During a Thursday morning hearing in Huntington, Joe Lovett, an Appalachian Mountain Advocates lawyer representing the citizen groups, said his clients, including the West Virginia Highlands Conservancy and the Sierra Club, have approved the agreement.
Patriot's governing board approved the settlement, Lovett told Chambers, but several of the company's banks and "other stakeholders" still need to be briefed before details can be discussed publicly.
Lovett said Patriot plans to bring its president and chief operating officer, Ben Hatfield, to court sometime within the next 30 days to help the judge "understand the impact" of the agreement.
Word of the tentative deal comes a week after Patriot increased by more than $300 million its stated liability for selenium treatment costs, according to corporate disclosures filed with the U.S. Securities and Exchange Commission.
At the end of 2011, Patriot listed its selenium liabilities as $196 million. In a quarterly filing on Aug. 9, Patriot added another $307 million to that amount. After accounting for accrued expenses, the company's reported selenium treatment liability was listed as $440 million.
Last month, St. Louis-based Patriot filed for bankruptcy court protection while it attempts to reorganize, amid one of the toughest coal markets in years.