Bankrupt Patriot Coal Corp. agreed Thursday to become the first U.S. coal operator to phase out and eventually stop all large-scale mountaintop removal mining in central Appalachia under an agreement reached with three environmental groups that sued over pollution from several West Virginia operations.
St. Louis-based Patriot said the proposed agreement allows it to postpone as much as $27 million in expenses into 2014 and beyond, improving its liquidity and the likelihood it can successfully emerge from Chapter 11 protection as a viable business.
Mountaintop removal is a highly efficient but particularly destructive form of strip mining unique to West Virginia, Kentucky, Virginia and Tennessee. Coal companies blast apart mountain ridge tops to expose multiple coal seams. The resulting rock and debris is dumped in streams, creating so-called valley fills.
The deal comes as Patriot tackles litigation that must be resolved during those proceedings. The terms would be binding on any subsidiaries it sells or spins off.
Presented to U.S. District Judge Robert Chambers in Huntington for consideration, the agreement came out of water pollution lawsuits filed by the Sierra Club, Ohio Valley Environmental Coalition and West Virginia Highlands Conservancy.
The continuation or expansion of large-scale surface mining is no longer in Patriot's best long-term interests, President Ben Hatfield told the judge.
"Patriot Coal recognizes that our mining operations impact the communities in which we operate in significant ways," he acknowledged, adding that the agreement will reduce the company's environmental footprint.
In exchange for phasing out mountaintop removal and agreeing to caps on the amount of coal it produces from strip mining, Patriot gets additional time to install selenium treatment systems at several mines. The pollution control technology was required under previous legal settlements.
Patriot is one of the largest mountaintop removal operators in the region.
Michael Brune, executive director of the Sierra Club, called the agreement a historic moment in the fight against what he called an "abhorrent" form of mining.
"Patriot Coal may be the first company to cease mountaintop removal mining, but because of the tireless efforts of committed volunteers and community organizations, it certainly won't be the last," he said.
But word of the deal concerned the United Mine Workers of America, even though it appears there will be no immediate job losses. The union is battling Patriot to maintain pension and health care benefits for retirees as the company reorganizes.
"Coal mining has always been an occupation of continuous change, whether it's technological change, changes in mining methods, changes in markets, or changes in regulations," President Cecil Roberts said. "Companies have always made strategic decisions based on those changes and workers are left to live with the consequences. That is what has happened here."
People who live near the operations complain about not only property damage but also health problems they believe are related to the dust and water pollution the operations create. Whether the practice should continue has been the source of intense conflict in West Virginia, where surface miners depend on it for their livelihoods.
The agreement caps the amount of coal that Patriot can mine from surface operations at 6.5 million tons in 2014, falling to 5 million tons in 2017. By January 2018, the amount is limited to no more than 3 million tons a year.