Hearing about coal companies' pollution reports opens in Frankfort

bmusgrave@herald-leader.comSeptember 1, 2011 

FRANKFORT — A commissioner in the state Energy and Environment Cabinet told a judge Wednesday the cabinet had not done enough to ensure that mining companies were submitting accurate water pollution discharge reports.

Bruce Scott said during a Franklin Circuit Court hearing that when a group of environmentalists filed a notice of intent to sue in October over violations of the Clean Water Act, the cabinet was alerted that there were systematic problems with the labs the mining companies were using to monitor pollutants.

"The cabinet should have been doing something that it wasn't," Scott said of monitoring the reports. Since the notice of intent to sue, the state has issued other enforcement actions against ICG, Frasure Creek Mining and other mining companies because of problems with water discharge reports, Scott said.

His testimony came on the first day of a three-day hearing on whether fines totaling $660,000 against Frasure Creek and ICG as part of a settlement agreement between the cabinet and the companies were large enough to protect the public and ensure compliance.

Four environmental groups filed a notice of intent to sue Frasure Creek and ICG of Hazard in October after their examination of water pollution reports found about 20,000 instances of questionable record keeping and reporting of pollutants discharged into Kentucky waterways from mining sites.

Under the Clean Water Act, the state has 60 days to review such allegations. If the state does not act within 60 days, citizens groups may sue the companies in federal court.

The state filed its enforcement action against Frasure Creek and ICG on the 59th day.

But the environmentalists contend the $310,000 fine against Frasure Creek and $350,000 fine against ICG for 2,700 instances of bad record keeping and reporting were too small and would not deter companies from submitting false data to the state.

The environmental groups said fines for the violations the state found could have totaled $103 million. They filed suit in Franklin Circuit Court asking to intervene in the case after the state and mining companies announced the settlement in December.

Mary Cromer, a lawyer for Appalachian Citizens Law Center, said during opening arguments Wednesday that the fines did not cover the business advantage the mining companies received from using subpar laboratories to test water. The mining companies were fined about $200 per violation for submitting erroneous data.

The mining companies and the state say that the consent agreement and fines were adequate and that the mining companies have agreed to switch laboratories or bring their water-testing labs up to newly established state standards. The new state standards were prompted by the suit filed by the environmental groups. Moreover, lawyers for the state and the mining companies say no company will want to enter a consent agreement with the state if that agreement can be challenged by a third party in court.

Staff from the Energy and Environmental Cabinet testified that the state looked at a host of factors when it levied the fines and that they did not consider all of the violations to be administrative errors. Lawyers for the cabinet and for the mining companies strenuously and repeatedly objected to Cromer's questions about how the cabinet determines how much to fine a mining company for enforcement violations.

Mary Stephens, a lawyer for the cabinet, said divulging such information "could chill settlement discussions in the future."

Still, Franklin Circuit Judge Phil Shepherd allowed some cabinet employees to answer questions about how the cabinet assessed the fine against Frasure Creek and ICG. Jeff Cummings, an assistant director in the Division of Enforcement, testified that the original fines were $525,000 for Frasure Creek and $600,000 for ICG. Through negotiations with the companies, the fines were reduced.

But state officials also testified that when they began to investigate whether the data supplied by the mining companies' labs were accurate, they had a difficult time determining how many discharge pipes Frasure Creek had.

The hearing is expected to take at least three days. It is not clear when Shepherd will issue a ruling.

Kentuckians for the Commonwealth, Kentucky Riverkeeper, Waterkeeper Alliance and Appalachian Voices are the groups intervening in the case. ICG and Frasure Creek are two of the largest surface mining operations in the state.

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