By Brian Sewell
On Nov. 15, amid bankruptcy litigation and multiple lawsuits, Patriot Coal announced it would begin phasing out mountaintop removal coal mining in Appalachia as part of a settlement over selenium pollution. One of the largest operators in the region, the St. Louis-based spin-off of Peabody Energy is the first major coal operator to announce it will stop using mountaintop removal.
According to the agreement made with the Sierra Club, the Ohio Valley Environmental Coalition and the West Virginia Highlands Conservancy, Patriot will gradually reduce production from surface mines over the next several years and immediately rescind pending permits for new surface mines.
In his statement to U.S. District Judge Robert Chambers, Patriot CEO Ben Hatfield said that Patriot recognizes that its mining operations “impact the communities in which we operate in significant ways,” adding that ending mountaintop removal will reduce the company’s environmental footprint.
Hatfield’s statement, however, focused largely on the financial benefits of reducing the company’s risks as it works through bankruptcy. He added that the settlement is consistent with Patriot’s 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.”
As the industry faces declining domestic use and competition from natural gas, coal operators in Appalachia are turning to metallurgical coal and focusing on meeting the growing demand overseas. By reducing the regulatory and market risks of continuing to operate mountaintop removal mines, Patriot believes it will increase the likelihood of emerging from bankruptcy as a viable business, able to satisfy its obligations to its nearly 4,000 employees.
Unsurprisingly, representatives of environmental groups and the coal industry saw the news differently. Executive director of the Sierra Club Michael Brune said that “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.” On the other hand, West Virginia Coal Association President Bill Raney remarked that “It’s one company trying to restructure itself. This doesn’t change anything. I don’t think you can apply this universally across the industry or across the state.”
As part of the agreement, Patriot is able to delay $27 million in selenium pollution compliance costs until 2014, improving the company’s ability to pay an estimated $400 million in long-term selenium cleanup costs.
Patriot Coal filed for bankruptcy in July after reporting considerable losses since 2010. On Nov. 27, a federal judge granted a request by Patriot employees to move the bankruptcy litigation from New York City to St. Louis, where Patriot and parent companies Peabody Energy and Arch Coal are based.