Ohio and Pennsylvania regulators say Patriot Coal's reorganization plan does not adequately address the company's obligations to clean up mine pollution.
Both states filed separate motions opposing the plan's approval this week in U.S. Bankruptcy Court in Richmond, Virginia.
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A motion filed by the Ohio Department of Natural Resources said the plan would leave Patriot Coal with little to no ability to address environmental problems and to perform required land reclamation following operations at the Sunnyhill Mine Complex.
"New violations will occur, but the Debtors will not have the resources or equipment to repair any problems that may occur under the Ohio Permit. These violations, which can incur penalties, are not provided for in the Plan," the motion says.
Another motion filed by the Pennsylvania Department of Environmental Protection said the reorganization plan does not provide for how Patriot Coal affiliate Eastern Associated Coal will meet its environmental obligations for the Colver and Delmont mines, which no longer operate. Drainage from both mines must be treated to remove iron, aluminum, manganese and other pollutants.
West Virginia regulators have voiced similar concerns about the reorganization plan. In an August filing, the West Virginia Department of Environmental Protection said the plan would leave the company with no assets to cover hundreds of millions of dollars in mine pollution cleanup.
Ohio and Pennsylvania regulators also objected to the plan's release provisions.
The Ohio agency said releasing current and former officers, directors, employees and others connected with the company from any claims violates bankruptcy law. The Pennsylvania department said the provisions are so broad that they could be read to release the Virginia Conservation Legacy Fund and any liquidating trustees from their obligations.
The Virginia nonprofit plans to acquire the Ohio permit and surety bond for the Sunnyhill complex, along with mining permits for several Patriot Coal operations in West Virginia. Patriot plans to sell a majority of its assets to Lexington, Kentucky-based Blackhawk Mining LLC.
Patriot Coal filed for Chapter 11 bankruptcy protection on May 12. An auction of the company's assets is set for Friday.
This story has been corrected to show that the name of the Pennsylvania agency is the Department of Environmental Protection, not the Department of Natural Resources.