MORGANTOWN, W.Va. - 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.