Roanoke Law Firm Wins Huge Environmental Settlement

Scott Sexton of GLRM (top) and Matthew Broughton.^

Roanoke law firm Gentry Locke Rakes & Moore, representing three Virginia coal owners, has secured a $75 million settlement from Consol Energy Inc. of Canonsburg, Penn., and its subsidiaries. The award results from the energy consortium’s decision to secretly dump billions of gallons of contaminated water into several mines in Western Virginia for over a decade.

The award is among the highest environmental property damage settlements ever awarded in the U.S. On June 1, 2010, the parties to the Buchanan County Circuit Court case of Yukon Pocahontas Coal Company, et al. v. Consolidation Coal Company, et al., Island Creek Coal Company, Consol Energy, Inc., and CNX Gas Company announced to Judge Michael Moore that the case had been settled for cash payment of $75 million.

That brought an end to a complicated legal proceeding lead by the plaintiffs’ attorney, J. Scott Sexton of Gentry Locke and Benjamin Street, of the Street Law Firm in Grundy. The case was filed when the plaintiffs discovered that Consolidation Coal Company had been secretly dumping billions of gallons of waste water from its Buchanan Mine into neighboring mines where the plaintiffs’ coal had previously been mined by Island Creek Coal Company.

The settlement was agreed to on May 31, the day before a jury trial was scheduled to begin in Buchanan County Circuit Court. Countering a last-minute offer by the Defendants, Sexton’s partner, Matthew W. Broughton with Gentry Locke, stepped in to address settlement issues with the help of Street’s partner, Tom Mullins. The strategy proved successful as Broughton initially demanded $100 million and ultimately refused to accept anything less than $75 million. Sexton says\, “Broughton did an amazing job of educating the defendants on what it was going to be like to hear a jury return a verdict north of $100 million. In the end, they saw it his way and got realistic.”

Plaintiffs alleged that, rather than building expensive wastewater treatment facilities, Consolidation chose a cheaper short-term solution that hid contaminated water problems from local regulators and coal owners. In 2004, the plaintiffs learned of Consolidation’s actions and filed suit.

The lawsuit sought damages for the injuries to Plaintiffs’ coal and gas, as well as for the value of the benefit that Consolidation received from its trespass that allowed it to stay in business and substantially reduce its costs. Sexton says he is pleased with the settlement and the clear message it sends to coal companies that ignore clean water regulations in the interest of profit.

“This case should serve as a warning to coal operators who choose to trespass in private rather than respect the property rights of the coal owners they depend upon for their operations and profits,” says Sexton. “It reinforces to coal operators that the coal leases under which they operate do not allow actions that injure or diminish the value of the lessor’s property; it confirms that a parent corporation cannot assume it has rights through the contracts of its subsidiaries; and it indicates that hiding pollution-related property damages in Virginia will not protect a defendant under the statute of limitations."

The consol defendants had aggressively maintained that they were entitled to dump the waste water due to rights they alleged from an old coal lease between the plaintiffs and Island Creek Coal Company, and asserted that the Plaintiffs’ claims were barred by the statute of limitations.

The Circuit Court also ruled that the little-used statute of limitations tolling provision found in the federal CERCLA law applied to this state law case, so long as there was property damage resulting from the release of a contaminant. Reflecting on broader implications of the case, Sexton says, “This case highlights the fact that some coal operators and regulators have been far too slow to properly respond to decades-old provisions of the Clean Water Act that prohibit discharges of polluted waters that cause streams to exceed established limits for ‘non-traditional’ pollutants. It likely signals a new era for enforcement of Clean Water Act standards within the coal industry.”

Recent fish kills in northern West Virginia have caused increased scrutiny of these neglected discharges of pollutants such as chlorides, selenium, barium and cadmium. However, Sexton notes that work remains to be done to effectively enforce the laws regulating discharges of this nature.

“Most affected residents simply lack the information and resources to challenge activities going on in their own backyard,” says Sexton. “In the conflict between jobs/profits vs. health/environment, the former has prevailed at practically every turn.”