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Patriot Coal Says Pollution Deadlines May Cost $29 Million

Patriot Coal Corp. seeks relief from the usual bankruptcy rules to change environmental compliance deadlines it says will otherwise cost it $29 million in the near future.

Two of Patriot’s subsidiaries have been sued in West Virginia District Court, where orders have demanded they comply with certain deadlines to deal with pollution from selenium. The company said in court papers filed Sept. 28 that it needs to lift the so-called “automatic stay” that prevents bankruptcy companies from continuing lawsuits so it can seek a change to the deadlines.

If it can win an extension, Patriot and its subsidiaries “could defer up to $29 million in costs through the end of 2013, thereby providing clear tangible benefits” as the company works to reorganize, lawyers for Patriot wrote.

Lawsuits over the company’s selenium pollution date back to 2006, and the company has been sued by organizations including the Ohio Valley Environmental Coalition, the Sierra Club and the West Virginia Highlands Conservancy Inc., according to court papers. Most of the litigation is about the surface mining activities of its Apogee, Catenary and Hobet units, which mined coal in the 1980s and 90s before selenium pollution was a water quality issue, Patriot said.

Venue Request

Patriot, one of the largest coal producers in the U.S., filed for bankruptcy in July. Its creditors’ committee and senior creditors have also asked its bankruptcy judge to keep the coal producer’s reorganization in New York, after its union and the U.S. Trustee asked it be moved to West Virginia. The U.S. Trustee is an arm of the Justice Department that oversees bankruptcies.

U.S. Bankruptcy Judge Shelley C. Chapman has yet to rule on the issue.

The Department of Natural Resources in Kentucky joined the mine workers’ motion, citing the company’s mining activities in Kentucky. West Virginia has said it has an interest in whether the company sells or abandons its property in that state.

Patriot has 12 active mining complexes in Appalachia and the Illinois Basin and controls an estimated 1.9 billion tons of coal reserves, according to court papers. It sells thermal coal to electricity generators and metallurgical coal to steel and coke producers.

In its Chapter 11, Patriot listed assets of $3.57 billion and debt of $3.07 billion as of May 31.

The case is In re Patriot Coal Corp., 12-bk-12900, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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