Arch Coal (ACI)

 

Surface mines at our Mingo Logan and Coal-Mac mining operations were identified in an existing lawsuit brought by the Ohio Valley Environmental Coalition (OVEC) in the U.S. District Court for the Southern District of West Virginia as having been granted Clean Water Act § 404 permits by the Army Corps of Engineers, allegedly in violation of the Clean Water Act and the National Environmental Policy Act.

 

The lawsuit, brought by OVEC in September 2005, originally was filed against the Corps for permits it had issued to four subsidiaries of a company unrelated to us or our operating subsidiaries. The suit claimed that the Corps had issued permits to the subsidiaries of the unrelated company that did not comply with the National Environmental Policy Act and violated the Clean Water Act.

 

The court ruled on the claims associated with those four permits in orders of March 23 and June 13, 2007. In the first of those orders, the court rescinded the four permits, finding that the Corps had inadequately assessed the likely impact of valley fills on headwater streams and had relied on inadequate or unproven mitigation to offset those impacts. In the second order, the court entered a declaratory judgment that discharges

 

Two of our operating subsidiaries were identified in an existing lawsuit as having been granted Clean Water Act § 404 permits by the Corps allegedly in violation of the Clean Water Act and the National Environmental Policy Act. Surface mines at our Mingo Logan and Coal-Mac mining complexes were identified in the suit for having received permits from the Corps. The lawsuit, brought by the Ohio Valley Environmental Coalition in September 2005 in the U.S. District Court for the Southern District of West Virginia, had originally been filed against the Corps for permits it had issued to coal operations owned by subsidiaries of a company unrelated to us or our operating subsidiaries. The existing suit claims that the Corps had issued permits to the coal operations belonging to the unrelated company that do not comply with the National Environmental Policy Act and violate the Clean Water Act.

 

The court proceeded to rule on the challenges to those four permits in orders of March 23 and June 13, 2007. In the first of those orders, the court rescinded the four permits, finding that the Corps had inadequately assessed the likely impact of valley fills on headwater streams and had relied on inadequate or unproven mitigation to offset those impacts. In the second order, the court entered a declaratory judgment that discharges of sediment from the valley fills into sediment control ponds constructed in-stream to control that sediment must themselves be permitted and meet the limits imposed on discharges from these ponds. Both of the district court rulings were appealed to the U.S. Court of Appeals for the Fourth Circuit.

 

While the court was considering the challenge to the four permits unrelated to our operating subsidiaries, the plaintiffs were permitted to add challenges to our Coal-Mac, Inc. and Mingo Logan Coal Company subsidiaries. Plaintiffs sought preliminary injunctions against both operations, but later reached agreements with our operating subsidiaries that have allowed mining to progress in limited areas while the district court’s rulings are on appeal. The claims against Coal-Mac, Inc. were thereafter dismissed.

 

On February, 13, 2009, the Fourth Circuit reversed the District Court’s two orders. The Fourth Circuit held that the Corps’ jurisdiction under Section 404 of the Clean Water Act is limited to the narrow issue of the filling of jurisdictional waters. The court also held that the Corps’ findings of no significant impact under the National Environmental Policy Act and no significant degradation under the Clean Water Act are entitled to deference. Such findings entitle the Corps. to avoid an environmental impact statement, the absence of which was one subject of the appeal. These holdings also validated the type of mitigation projects proposed by some of our operations to minimize impacts and comply with the relevant statutes. Finally, the Fourth Circuit found that stream segments, together with the sediment ponds to which they connect, are unitary “waste treatment systems,” not “waters of the United States,” and that the Corps’ had not exceeded its authority in permitting them. Unless the Fourth Circuit shortens or extends the time, the Ohio Valley Environmental Coalition will have until March 30, 2009 to petition for rehearing. Any appeal to the U.S. Supreme Court must be filed by May 14, 2009, unless a petition for rehearing is filed, in which case the time runs from the denial of that petition. The Supreme Court’s acceptance of such appeal is discretionary. If no appeal or petition for rehearing is filed, the order will take effect on April 6, 2009. If the Fourth Circuit decision stands, then a backlog of permits pending before the Corps may ease. The impact on our Mingo Logan permit is not yet entirely clear, but it could serve to free that permit for use sooner than anticipated.

 

 

Two of our operating subsidiaries were identified in an existing
lawsuit as having been granted Clean Water Act § 404
permits by the Corps allegedly in violation of the Clean Water
Act and the National Environmental Policy Act. Surface mines at
our Mingo Logan and Coal-Mac mining complexes were identified in
the suit for having received permits from the Corps. The
lawsuit, brought by the Ohio Valley Environmental Coalition in
September 2005 in the U.S. District Court for the Southern
District of West Virginia, had originally been filed against the
Corps for permits it had issued to coal operations owned by
subsidiaries of a company unrelated to us or our operating
subsidiaries. The existing suit claims that the Corps had issued
permits to the coal operations belonging to the unrelated
company that do not comply with the National Environmental
Policy Act and violate the Clean Water Act.

 

The court proceeded to rule on the challenges to those four
permits in orders of March 23 and June 13, 2007. In the
first of those orders, the court rescinded the four permits,
finding that the Corps had inadequately assessed the likely
impact of valley fills on headwater streams and had relied on
inadequate or unproven mitigation to offset those impacts. In
the second order, the court entered a declaratory judgment that
discharges of sediment from the valley fills into sediment
control ponds constructed in-stream to control that sediment
must themselves be permitted and meet the limits imposed on
discharges from these ponds. Both of the district court rulings
were appealed to the U.S. Court of Appeals for the Fourth
Circuit.

 

While the court was considering the challenge to the four
permits unrelated to our operating subsidiaries, the plaintiffs
were permitted to add challenges to our Coal-Mac, Inc. and Mingo
Logan Coal Company subsidiaries. Plaintiffs sought preliminary
injunctions against both operations, but later reached
agreements with our operating subsidiaries that have allowed
mining to progress in limited areas while the district
court’s rulings are on appeal. The claims against Coal-Mac,
Inc. were thereafter dismissed.

 

On February, 13, 2009, the Fourth Circuit reversed the District
Court’s two orders. The Fourth Circuit held that the
Corps’ jurisdiction under Section 404 of the Clean
Water Act is limited to the narrow issue of the filling of
jurisdictional waters. The court also held that the Corps’
findings of no significant impact under the National
Environmental Policy Act and no significant degradation under
the Clean Water Act are entitled to deference. Such findings
entitle the Corps. to avoid an environmental impact statement,
the absence of which was one subject of the appeal. These
holdings also validated the type of mitigation projects proposed
by some of our operations to minimize impacts and comply with
the relevant statutes. Finally, the Fourth Circuit found that
stream segments, together with the sediment ponds to which they
connect, are unitary “waste treatment systems,” not
“waters of the United States,” and that the
Corps’ had not exceeded its authority in permitting them.
Unless the Fourth Circuit shortens or extends the time, the Ohio
Valley Environmental Coalition will have until March 30,
2009 to petition for rehearing. Any appeal to the
U.S. Supreme Court must be filed by May 14, 2009,
unless a petition for rehearing is filed, in which case the time
runs from the denial of that petition. The Supreme Court’s
acceptance of such appeal is discretionary. If no appeal or
petition for rehearing is filed, the order will take effect on
April 6, 2009. If the Fourth Circuit decision stands, then
a backlog of permits pending before the Corps may ease. The
impact on our Mingo Logan permit is not yet entirely clear, but
it could serve to free that permit for use sooner than
anticipated.

 

 

Two of our operating subsidiaries have been identified in an existing lawsuit as having been granted Clean Water Act § 404 permits by the Corps allegedly in violation of the Clean Water Act and the National Environmental Policy Act. Surface mines at our Mingo Logan and Coal-Mac mining complexes have been identified in the suit for having received permits from the Corps. The lawsuit, brought by the Ohio Valley Environmental Coalition in the U.S. District Court for the Southern District of West Virginia, had originally been filed against the Corps for permits it had issued to coal operations owned by subsidiaries of a company unrelated to us or our operating subsidiaries. The existing suit claims that the Corps had issued permits to the coal operations belonging to the unrelated company that do not comply with the National Environmental Policy Act and violate the Clean Water Act. Plaintiffs were later allowed to amend their complaint to add challenges to permits issued to our Coal-Mac, Inc. and Mingo Logan Coal Company subsidiaries, but those claims have not advanced. Rather, the court proceeded first on the earlier challenge to four permits of companies unrelated to us.

 

The court proceeded to rule on the challenges to those four permits in orders of March 23 and June 13, 2007. In the first of those orders, the court rescinded the four permits, finding that the Corps had inadequately assessed the likely impact of valley fills on headwater streams and had relied on inadequate or unproven mitigation to offset those impacts. That ruling could require the Corps to prepare environmental impact statements on those permits, which would slow the permit process. The ruling could, as a practical matter, affect our Coal-Mac and other future permits, but the Corps has already done an environmental impact statement on the Mingo Logan permit. In the second order, the court entered a declaratory judgment that discharges of sediment from the valley fills into sediment control ponds constructed in-stream to control that sediment must themselves be permitted and meet the limits imposed on discharges from these ponds. Unless reversed, that ruling will likely complicate the ability to construct sediment ponds in steep-sloped areas where in-stream locations are frequently the only practicable ones. Both of the district court rulings are on appeal to the Fourth Circuit Court of Appeals, and a decision is expected from that court in 2008.

 

While the court was considering the challenge to the four permits unrelated to our operating subsidiaries, the plaintiffs were permitted to add challenges to our Coal-Mac, Inc. and Mingo Logan Coal Company subsidiaries. Plaintiffs sought preliminary inunctions as to both operations, but later reached agreements with our operating subsidiaries that have allowed mining to progress in limited areas while the district court’s rulings are on appeal.

 

 

Two of our operating subsidiaries have been identified in an
existing lawsuit as having been granted Clean Water Act
§ 404 permits by the Corps allegedly in violation of
the Clean Water Act and the National Environmental Policy Act.
Surface mines at our Mingo Logan and Coal-Mac mining complexes
have been identified in the suit for having received permits
from the Corps. The lawsuit, brought by the Ohio Valley
Environmental Coalition in the U.S. District Court for the
Southern District of West Virginia, had originally been filed
against the Corps for permits it had issued to coal operations
owned by subsidiaries of a company unrelated to us or our
operating subsidiaries. The existing suit claims that the Corps
had issued permits to the coal operations belonging to the
unrelated company that do not comply with the National
Environmental Policy Act and violate the Clean Water Act.
Plaintiffs were later allowed to amend their complaint to add
challenges to permits issued to our Coal-Mac, Inc. and Mingo
Logan Coal Company subsidiaries, but those claims have not
advanced. Rather, the court proceeded first on the earlier
challenge to four permits of companies unrelated to us.

 

The court proceeded to rule on the challenges to those four
permits in orders of March 23 and June 13, 2007. In the
first of those orders, the court rescinded the four permits,
finding that the Corps had inadequately assessed the likely
impact of valley fills on headwater streams and had relied on
inadequate or unproven mitigation to offset those impacts. That
ruling could require the Corps to prepare environmental impact
statements on those permits, which would slow the permit
process. The ruling could, as a practical matter, affect our
Coal-Mac and other future permits, but the Corps has already
done an environmental impact statement on the Mingo Logan
permit. In the second order, the court entered a declaratory
judgment that discharges of sediment from the valley fills into
sediment control ponds constructed in-stream to control that
sediment must themselves be permitted and meet the limits
imposed on discharges from these ponds. Unless reversed, that
ruling will likely complicate the ability to construct sediment
ponds in steep-sloped areas where in-stream locations are
frequently the only practicable ones. Both of the district court
rulings are on appeal to the Fourth Circuit Court of Appeals,
and a decision is expected from that court in 2008.

 

While the court was considering the challenge to the four
permits unrelated to our operating subsidiaries, the plaintiffs
were permitted to add challenges to our Coal-Mac, Inc. and Mingo
Logan Coal Company subsidiaries. Plaintiffs sought preliminary
inunctions as to both operations, but later reached agreements
with our operating subsidiaries that have allowed mining to
progress in limited areas while the district court’s
rulings are on appeal.