A judge on Monday rejected a proposed state settlement with a coal company accused of submitting false water-pollution monitoring reports that concealed thousands of violations.
The state Energy and Environment Cabinet had proposed a fine of $310,000 against Frasure Creek Mining, but several environmental groups intervened in the case, arguing the fine was too low.
Franklin Circuit Judge Phillip J. Shepherd agreed, saying the fine was insufficient to deter more bad behavior.
"The proposed consent decree is unlikely to be successful in producing a change in behavior by Frasure Creek, because the economic benefit that it obtains by taking shortcuts and submitting unreliable data far outweighs the costs of compliance, or the risk of any fines and penalties that the cabinet will impose," Shepherd wrote.
The judge also said the settlement didn't include provisions for independent groups to monitor Frasure Creek's compliance.
Shepherd ordered the cabinet to revise the settlement.
Environmental groups that had intervened in the case said Shepherd also rejected a separate 2013 proposed settlement between the state and Frasure Creek over other violations.
Frasure Creek was once one of the largest mountaintop-mining companies in Eastern Kentucky, but it was forced into bankruptcy last year and has no active mines in the state.
Appalachian Voices, Waterkeeper Alliance, Kentuckians for the Commonwealth and Kentucky Riverkeeper intervened in the cases.