Coal Tattoo

More investments in faulty selenium treatment?

Gazette photo by Lawrence Pierce/John Sawyer, chief technical officer at Liberty Hydrologic Systems, has installed selenium-treatment tanks like this one at sites in three states in the U.S.

In an earnings statement issued today, Patriot Coal told investors about its recent legal settlement regarding treatment of toxic selenium pollution from its strip mines:

During the 2010 third quarter, the Federal District Court in Huntington, West Virginia ruled on selenium lawsuits brought by various environmental constituencies against the Company’s Apogee and Hobet subsidiaries. Pursuant to the court order, Apogee was ordered, among other things, to install a biological-based fluidized bed reactor system to treat selenium discharges at certain affected outfalls. Additionally, Hobet was ordered to submit and implement a treatment plan to come into compliance with applicable selenium discharge limits under its Hobet 22 permit. As a result of this order, the Company recognized a charge of $20.7 million, which is expected to be spent over the estimated operating life of the treatment system. The charge was included in reclamation and remediation obligation expense in the 2010 third quarter. Additionally, the Company estimates the capital investment required as part of the order will be approximately $50.0 million.

In a conference call with industry analysts, Patriot CEO Richard M. Whiting had this to say about the legal settlement and the selenium issue:

It appears to us that it is an industry-wide issue and it will require an industry-wide comprehensive solution. There is definitely going to be impact to other people who mine coal.

There is no silver bullet to fix this quickly. It will take time and it will take money. There’s going to be a lot of activity around it for many years to come.

It seemed like the Patriot comments were especially timely, given a story in today’s Gazette in which Keith Pauley, CEO of the Mid-Atlantic Technology, Research & Innovation Center (MATRIC), announced:

… A MATRIC spin-off company, Liberty Hydro, has received a $500,000 investment from a Philadelphia-based private equity firm. Liberty Hydro has developed a system designed to remove selenium from water.

You have to wonder if these investors were aware of what U.S. District Judge Robert C. Chambers had to say in a recent ruling about zero-valent iron, or ZVI, selenium treatment technology that both Liberty Hydro and another firm have touted.

Here are a few quotes from Judge Chambers’ decision:

— Another deficiency in Apogee’s compliance is its unjustifiable, over-reliance on ZVI technology … Compared to the other treatment alternatives, Apogee has devoted more time, effort and focus on ZVI despite relatively poor results.

— It seems that Apogee chose ZVI from the beginning and wore blinders throughout the testing. After trying, with at least two different vendors, the original ZVI system and several modifications which resulted in failures, complications and only inconsistent, limited success, Patriot nonetheless seems bound and determined to stick with ZVI at some of its outfalls.

— Even before the Consent Degree, Plaintiffs’ experts and Defendants’ own consultant pointed out the questionable efficacy of ZVI applied in this setting.

— Then, and through the period since the Consent Decree, ZVI has not been demonstrated to perform consistently in reaching effluent limitations or in treating the expected flows.

— This court made clear that Defendants’ would be accountable and bear the risk if ZVI technology failed to measure up.

Note that Judge Chambers required Patriot to use not ZVI, but a different technology — and FBR system — at its Ruffner Mine.