Coal Tattoo

Let’s make a deal?

Environmental groups are asking some interesting questions about the federal government’s new Clean Water Act settlement with Patriot Coal Corp.

Joe Lovett, executive director of the Appalachian Center for the Economy and the Environment, told me that citizen groups he often represents will probably challenge the deal, after going along with a similar settlement (including a record $20 million fine) last year with Massey Energy.

I spelled out the basics of the $6.5 million deal with Patriot in a story for our Print edition today. And now, I’ve posted the EPA/Department of Justice complaint against Patriot here and the consent decree here.

When I was reading these documents, I noticed that EPA and company officials all signed off on the deal in late December or early January. Final DOJ signatures came in early February, and then DOJ lawyers filed the documents Thursday in U.S. District Court in Charleston. So essentially, the deal with Patriot was done while George W. Bush was still president, and then finalized after Barack Obama took the oath of office on Jan. 20.

“This is the Bush administration on its way out the door, once again giving a sweetheart deal to the coal industry,” added Lovett, who said environmental groups are hoping the Obama administration would revisit the Patriot deal.

The main issue for Lovett seems to be that it’s not clear what kind of damage was done by the hundreds of violations at issue in this case. “Nobody knows how much this fine should be, because we don’t know how much it’s going to cost to clean up the problems Patriot caused,” Lovett said.

What’s just as interesting to me is the interplay between EPA and the state Department of Environmental Protection in a growing number of these Clean Water Act cases involving the coal industry.

Recall that after federal regulators sued Massey in a massive Clean Water Act case a few years ago, we learned that DEP officials had for years simply not bothered to look at the discharge monitoring reports (DMRs) that coal companies file every month. But after Massey got hit with that $20 million fine, coal company lawyers started knocking on DEP’s door, wanting to “voluntarily” review past water pollution violations and enter into settlements.

DEP has since reached such deals with a variety of companies, and environmental groups think those settlements were aimed in large part at avoiding federal enforcement actions or citizen suits — either of which might have exposed the coal operators to larger fines or tougher compliance schedules.

Looking at the Patriot deal through this background gets a little complicated, but I’ll try to explain it.

First, the Patriot settlement resulted from a probe that EPA initially launched of Magnum Coal on January 25, 2008, about a week after the Massey settlement was publicly announced. In April 2008, Patriot went to DEP to try to negotiate a settlement for certain of its West Virginia operations’ water pollution problems. Then, in July, Patriot bought Magnum. And then, in September, DEP settled some water pollution violations with one of Magnum’s subsidiaries, Hobet Mining.

Phew. So, what’s the bottom line here?

Well, the new deal with Patriot does not include the violations already settled by the Hobet arrangement with DEP. And it also does not include violations by any non-Magnum Patriot operations. The consent decree specifically says those will be resolved by a separate settlement with DEP.

DEP has been especially secretive about its negotiations with coal companies in these Clean Water Act matters. But agency spokeswoman Kathy Cosco told me Thursday evening that more than a dozen separate settlements with those non-Magnum Patriot Coal operations are about ready to be announced publicly. It will be interesting to see what kind of fines they include.