Politics & Government

Coal company acknowledges violations, agrees to $6 million fine

A coal train near Typo Tunnel Lane in Typo on Dec. 11, 2006.
A coal train near Typo Tunnel Lane in Typo on Dec. 11, 2006.

A coal company accused of submitting false water-monitoring reports agreed to pay $500,000 in a $6 million settlement covering thousands of environmental violations, according to citizens groups involved in the deal.

The groups, regulators from the state Energy and Environment Cabinet and Frasure Creek Mining finalized the deal Monday evening, hours before new Republican Gov. Matt Bevin took the oath of office. The settlement outlines a $6 million fine for Frasure Creek. However, the company only had to pay the state $500,000, and won’t have to pay the rest if it abides by the deal.

The citizens groups felt it was important to finish the deal because of uncertainty over how Bevin’s administration would handle the case, said Erin Savage, Central Appalachian campaign coordinator for Appalachian Voices.

“It seemed like a safer bet to work with the cabinet we knew,” Savage said.

Ted Withrow, with Kentuckians for the Commonwealth, said much of the deal was worked out more than a month ago, but Frasure Creek delayed signing until the 11th hour.

Withrow said he thought the cost of continued litigation pushed the company to sign the deal. The citizens groups have sued Frasure Creek in federal court over alleged water-quality violations, and would have kept up that legal fight if the state settlement had not come through, Withrow said.

With the deal in place, the groups will move to end the federal claims, according to a news release.

This settlement should send a strong signal to the new administration that citizens can and will hold the state accountable for vigorously enforcing laws against polluters to ensure the health of our waters and communities.

Erin Savage, Central Appalachian campaign coordinator for Appalachian Voices

The citizens groups said the deal shows their resolve to continue to push for strong environmental oversight.

“This settlement should send a strong signal to the new administration that citizens can and will hold the state accountable for vigorously enforcing laws against polluters to ensure the health of our waters and communities,” Savage said.

Attempts on Tuesday to reach the Energy and Environment Cabinet and an attorney for Frasure Creek were not successful.

The settlement covers Frasure Creek and two affiliated companies, Trinity Coal Corporation and New Trinity Coal.

The three have no mining operations in Kentucky. Frasure Creek last month transferred its permits to another company, according to the deal.

If any of the three, or their owners or controllers, ever seek a mine permit in Kentucky, they will have to pay $2.75 million to the state as a result of the settlement, said Mary Varson Cromer, an attorney with the Appalachian Citizens’ Law Center who represented the citizens groups.

“We think this is a very strong settlement,” Cromer said.

Frasure Creek is owned by Essar Group, which is based in India, according to a news release from the citizens groups

As part of the deal, Frasure Creek admitted violations at surface mines in Floyd, Magoffin, Perry, and Pike counties, the groups said.

The citizens groups said the $6 million fine was the highest ever entered by the state against a company for environmental violations.

The groups involved in the settlement are Appalachian Voices, Kentuckians for the Commonwealth, Kentucky Riverkeeper, the Sierra Club, and Waterkeeper Alliance.

The settlement announced Tuesday followed years of efforts to hold Frasure Creek accountable for environmental violations at surface mines, including exceeding pollution limits and failing to properly report pollution.

Frasure Creek, based in West Virginia, was once one of the largest coal companies in Eastern Kentucky before going into bankruptcy in 2013.

In 2010 and again in 2014, citizens groups said they had found numerous cases in which Frasure Creek had submitted false water-monitoring data to the state.

Coal companies must monitor pollutants draining from surface mines into streams and report the readings. If pollutants exceed certain levels, the state can issue citations and financial penalties and require action to correct problems.

In the initial 2010 case, the state proposed a payment of $310,000 by Frasure Creek for violations at 39 mines.

The citizens' groups argued that fine was not steep enough to force compliance by the company and successfully fought to intervene in the case.

Franklin Circuit Judge Phillip J. Shepherd ultimately ruled that the state’s proposed settlement was inadequate.

The cabinet did not investigate the likely environmental harm from the company's conduct and failed to consider the extent of the violations and the potential danger to human health and the environment, Shepherd said.

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