This article originally provided by Anchorage Daily News

January 18, 2008

Big coal producer to pay $20 million for polluting streams

H. Josef Hebert, Associated Press
Washington

The country's fourth-largest coal producer, Massey Energy Co., will pay a $20 million fine as part of a settlement with the government over allegations that it routinely polluted hundreds of streams and waterways in West Virginia and Kentucky with sediment-filled wastewater and coal slurry.

Under the agreement with the Environmental Protection Agency, Massey Energy, headquartered in Richmond, Va., also will invest millions of dollars for pollution control improvements at its 44 mines and coal facilities in the two states and in Virginia, the EPA and Justice Department said Thursday.

The EPA estimates the improvements required by the settlement will cost Massey as much as $10 million, though the company said the cost is expected to be less. "That's their estimate," said Shane Harvey, Massey's assistant general counsel. "We do not have a firm estimate at this time. My guess is it would be below $10 million."

The agreement settled a complaint filed by the EPA in May alleging that the company violated the federal Clean Water Act on at least 4,500 occasions between January 2000 and the end of 2006 by discharging mining waste and sediment - including hazardous metals - into hundreds of streams and waterways and failing to control spills of coal slurry during its mining.

Some of the wastewater discharges were more than 10 times the amount allowed by state permits, the EPA said.

Massey officials announced the agreement Thursday, noting that it allows the company to avoid costly litigation and resolve questions about its liability for the damage. "We believe this agreement will benefit the environment as well as our shareholders," said Baxter Phillips Jr., the company's executive vice president and chief administrative officer.

The maximum penalties facing the company for the thousands of violations and days when permits were exceeded could have been as high as $2.4 billion, the EPA said.

The pollution "destroyed streams, destroyed fish habitat. There was definitely an environmental impact here," said Granta Nakayama, the assistant EPA administrator for enforcement. "We thought it was very serious."

The $20 million civil penalty is the largest ever for discharge permit violations under the Clean Water Act, Nakayama said. "This is a landmark settlement for the environment and raises the bar for the mining industry," he said.

As part of the agreement, Massey promises to develop and implement new procedures and tracking systems to prevent wastewater discharges and slurry spills, and to allow third-party audits of its pollution prevention program. The company also agrees to set aside 200 acres of riverfront land in West Virginia for conservation and protection against future mining.

The new pollution prevention measures are expected to keep an estimated 380 million pounds of sediment and other pollutants from Massey's mining out of the three states' waters each year.

The settlement concludes an EPA investigation of more than two years of Massey's mining. The complaint filed in May alleged that Massey routinely released metals, sediment and acid mine drainage into streams and rivers at amounts 40 percent or more than allowed by state permits.

And investigators found that Massey failed to control spills of coal slurry containing sediment and metals, allowing it to clog streams and harm fish habitat.

Massey, which posted $89 million in profit on revenue of nearly $1.7 billion for the first nine months of 2007, is the largest coal producer in Appalachia, operating 19 mining complexes in southern Virginia, southern West Virginia and eastern Kentucky.