False environmental reporting in the mining industry - lessons from Frasure Creek

Coal company Frasure Creek Mining stands accused of manipulating water pollution reports related to its operations in the US state of Kentucky. We investigate the issue of false reporting of environmental data in the mining industry, and ask if laws and regulatory bodies are fit for purpose.


mining blast

"I hope to have God on my side, but I must have Kentucky," stated Abraham Lincoln in 1861 at the outset of the US Civil War, underscoring the importance of the Commonwealth to the Union cause.

A century and a half later, the Bluegrass State is once again a key battleground in a bitter, protracted conflict, this time involving environmental activists, state regulators and the US coal mining industry.

In a letter dated 17 November 2014, four environmental groups accused Frasure Creek Mining - a subsidiary of India's Essar Group and formerly one of Kentucky's largest coal producers - of sending state officials duplicates of clean pollution reports that it had submitted the previous month.

The campaigners intend to sue Frasure Creek, accusing the firm of tens of thousands of violations of the Clean Water Act (CWA), the primary federal directive governing water pollution in the US.

"Frasure Creek’s actions - and the Cabinet’s failures to act - undermine the regulatory framework that safeguards the people and waters of Kentucky."

"Frasure Creek's actions -- and the Cabinet's failures to act -- undermine the regulatory framework that safeguards the people and waters of Kentucky," the aforementioned letter said. Peter Harrison, a staff lawyer with Waterkeeper Alliance, one of the four environmental groups, went even further.

"If you're a coal company in eastern Kentucky," he said, "basically you don't have to pay attention to the Clean Water Act because the primary enforcer down there is asleep at the wheel."

Courting controversy: the Frasure Creek Mining legal battle explained

The letter has reignited a long-running dispute that began back in 2010. Frasure Creek engaged in the controversial practice of strip mining, a process used to exploit coal seams close to ground level.

Dynamite and earth-moving machines called draglines are used to remove the surface topsoil. The abandoned mine drainage or 'runoff' flows into man-made ponds where heavy-metal pollutants such as cadmium and selenium settle to the bottom; the remainder is discharged into streams.

According to a New York Times report, the coalition comprising Appalachian Voices, Kentuckians for the Commonwealth, Kentucky Riverkeepers and Waterkeeper Alliance discovered that, in 2008 and 2009, Frasure Creek submitted more than 9,000 duplicate measurements on discharge monitoring reports (DMRs) - and had not reported a single violation of pollution standards during that period.

Fossil fuel companies are required by law to perform regular tests for harmful levels of elements such as iron, manganese and acidity, and report the results to regulators in DMRs each quarter.

Kentucky's Energy and Environment Cabinet admitted that it had missed the infringements, fined Frasure Creek $310,000 (the duplicate reports were put down to inadvertent transcription errors) and absolved the company of pollution violations. The Cabinet promised to tighten its scrutiny of DMRs and pollution testing facilities, while Frasure Creek sought refuge in bankruptcy protection.



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Undeterred, Apalachian Voices and its partners argued for tougher penalties, took the dispute to the State Supreme Court, and won. The New York Times reports that by early 2011, Frasure Creek was reporting discharge measurements that exceeded permitted legal limits by up to 13 times.

The environmental coalition now claims the company, which is no longer active in Kentucky, had resumed the practice of submitting falsified reports to the tune of 28,000 violations in the past year.

Trust funding: understaffing threatens state environmental regulation

The controversy has refocused US media attention on the issue of false reporting of environmental data in the mining industry and the ability of state regulators to enforce legislation such as the CWA.

In the letter published last November, activists allege that the state Energy and Environment Cabinet "has utterly failed to even notice these flagrant violations of the laws that it is bound to uphold".

The Cabinet branded the letter "inaccurate and inflammatory", stating that it had handed out $3.7m in penalties and reached 67 enforcement settlements with coal companies since 2011. When asked for its comment on the latest developments, the Cabinet told Mining Technology that "the Division of Water cannot comment on on-going litigation as this issue is currently before the courts."

One issue is underfunding. In a 24-page ruling reported in Kentucky newspaper The Courier-Journal, Judge Phillip J. Shepherd, a former head of the Energy and Environment Cabinet, concluded that the organisation was so understaffed that it was struggling to effectively enforce clean-water rules.

Shepherd wrote: "With only a handful of enforcement personnel, and a dwindling number of field inspectors ... it is impossible for the cabinet to effectively regulate permitees such as Frasure Creek who systematically violate the [Clean Water Act]."

In a written statement, state officials acknowledged their budget constraints, and the fact that cabinet and other state program funding needs are weighed by the governor and the lawmakers.

"On multiple occasions [energy cabinet secretary Len Peters and other cabinet officials] have relayed to the legislature that the impacts of continued cuts to the cabinet will eventually manifest in ways that would affect personnel and programs," the statement said.

Grass roots activism: environmental groups take the fight to big mining

Such claims cut little ice with Appalachian Voices and their partners, however, who draw attention to what they see as a cosy relationship between the coal industry and the state government.

"With each false entry on these reports, the company is deceiving regulators and the public about the pollution it may be discharging into Kentucky waters," said Erin Savage, central Appalachian campaign coordinator with Appalachian Voices. "The judge's orders confirm what citizens have known for some time; that the state is failing to enforce the Clean Water Act in eastern Kentucky."

Judge Phillip J. Shepherd also emphasised the need for authorities to hold mining firms to account.

"Frasure Creek engaged in the controversial practice of strip mining, a process used to exploit coal seams close to ground level."

His court ruling read: "If the cabinet suspects pollution violations but only investigates and assess penalties for administrative reporting violations, then cabinet creates incentives for inaccurate reporting or failing to report, as opposed to honest reporting that reveals pollution violations."

Shepherd wrote that violations "so systemic and pervasive almost inevitably lead to degradation of the environment", and creates a "regulatory climate where cheating pays".

As the case illustrates, the job of tackling false reporting of data in the mining industry is increasingly being taken up by grass roots organisations. A high-profile victory for Appalachian Voices and its partners in Kentucky will embolden other US activists to take the fight to large fossil fuel companies.

And the chief weapon at the environmentalists' disposal is the Clean Water Act, which, crucially, allows citizens to enforce the law if state regulators do not act within 60 days of a lawsuit threat.

Meanwhile, the court battle in the Appalachians rumbles on. At stake is the right of Kentuckians to clean water, the efficacy of the state's Energy and Environment Cabinet, Frasure Creek's reputation and even the credibility of the CWA. Like Lincoln, both sides in the dispute must have Kentucky.

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