Judgment Received by Patriot Coal Subsidiaries in Apogee and Hobet Selenium Lawsuits
St. Louis, August 31 – Patriot Coal Corporation confirmed that the Federal District Court in Huntington, West Virginia issued rulings today with respect to pending selenium lawsuits brought by various environmental constituencies against the Company's Apogee and Hobet subsidiaries. Pursuant to the court order, Apogee was found in contempt for failing to comply with a consent decree issued in March 2009 requiring compliance with selenium limits in certain mining permits. Apogee was ordered, among other things, to install a biological-based fluidized bed reactor (FBR) system to treat selenium discharges at certain affected outfalls and to come into compliance with applicable selenium discharge limits by March 1, 2013. Separately, Hobet was ordered by the court to submit a treatment plan by October 1, 2010 and to come into compliance with applicable selenium discharge limits under its Hobet 22 permit by May 1, 2013.
"We are particularly disappointed with the contempt ruling," said President & Chief Executive Officer Richard M. Whiting. "Patriot has been at the forefront of developing a solution to this complex issue confronting our Company and the Central Appalachian coal mining industry. We have dedicated significant resources over the last several years to take an industry-leading position in identifying viable treatment technology to address selenium discharges."
"While Patriot believes that FBR has promise, it is important to understand that this technology has never before been used in commercial applications for the removal of selenium in any context, including coal mining. Until the selenium standard is modified, the Central Appalachian mining industry will continue to face more stringent standards for aquatic life in regional drainages than those established for drinking water in some major cities. In fact, the Safe Drinking Water Act standard of fifty parts per billion for selenium is ten times higher than the standard of five parts per billion being selectively applied to West Virginia coal mining operations under the Clean Water Act," continued Whiting. "Looking forward, Patriot is assessing its position in these cases and will determine its actions after the written judgment has been received."
The Company estimates that the initial investment required as part of the judgment will be approximately $50 million, and annual operating costs will be approximately $3 million. The court also ordered Patriot to establish a $45 million letter of credit to secure performance of its obligations under the order.