Judge hears arguments in coal case | Lexington Herald Leader

FRANKFORT — A Franklin Circuit Court judge said Thursday that he would rule soon on whether a group of environmentalists could intervene in a $660,000 settlement between the state and two mining companies over lax water pollution reporting.

Judge Phillip Shepherd heard more than two hours of arguments Thursday from environmental groups, the Energy and Environment Cabinet, and ICG and Frasure Creek Mining on whether the environmental groups could intervene in a consent judgment between the state and the mining companies.

Lawyers for the environmental groups, which include North Carolina-based Appalachian Voices, Kentuckians for the Commonwealth, Kentucky Riverkeeper and New York-based Waterkeeper Alliance — have argued that the settlement was overbroad and that the monetary penalties were too low.

Mary Cromer, a lawyer for the Appalachian Citizens Law Center in Whitesburg, told Shepherd that the consent judgment was hammered out between the agency and the mining companies and that there was no transparency into how the decisions were reached regarding problems with lax procedures and violations at third-party water-testing laboratories.

"We are acting in the public interest," Cromer said of the environmental groups.

If the state had been acting in the interest of the public, "Why would it oppose our application" to intervene?" Cromer asked.

Lawyers for the cabinet and the mining industry said there is no provision in state regulations to allow a citizen to intervene. The Clean Water Act, however, does allow citizens to intervene. The attorneys argued that the environmental groups should file their complaint in federal court, not state court.

Lawyers for the environmental groups countered that the Energy and Environment Cabinet and the mining companies decided to file the consent judgment in state court. If Shepherd approves the settlement, it might hurt the environmentalists' chances of getting their case in federal court because a state court has said the punishments decided by the state were adequate.

Mary Stephens, a lawyer for the Energy and Environment Cabinet, said the cabinet acted swiftly to address the concerns of the environmentalists when they showed that the third-party labs hired to test pollutants had falsified documents.

"The cabinet has acted quickly and thoroughly," Stephens said.

Lawyers for the mining companies said the state and the mining companies worked out the settlement over the problems found in the water-testing laboratories. If Shepherd allows the environmental groups to intervene in that agreement, it could allow other groups to intervene in other settlements, said Anne Chesnut, a lawyer for Frasure Creek Mining.

"They cannot block a settlement," Chesnut said of the environmental groups. "They can not renegotiate a settlement. ... They are allowed to comment."

Allowing the environmental groups to intervene would reopen the settlement agreement to further litigation, Chesnut said.

It was the environmental groups that alerted the cabinet to potential problems with water testing. In October, the groups notified the state that they were going to sue under the federal Clean Water Act. In a review of discharge monitoring reports submitted to the state by the companies, the groups said there were 20,000 instances of falsified documents or excess pollutants discharged into creeks in Eastern Kentucky.

The notice of intent to sue triggered a review by the state, which found 2,765 violations. The environmentalists argue that the violations could have equaled a fine as large as $103 million. Instead, the two mining companies combined are paying $660,000.

The cabinet and the mining companies have countered that many of the problems with the water monitoring reports were errors and were not intentional. The environmental groups argue that many of those reports were falsified.

Roger Nicholson, senior vice president of International Coal Group, said his organization has switched to different third-party laboratories after the problems were reported.

"The anti-mining groups' claims of fraud are patently false and ludicrous, and we resent their efforts to impugn the character of our employees, who live and work in the communities where we operate," Nicholson said in a written statement.

Stephens said the two third-party labs that were the subject of the legal action are now out of business.