Galax, Virginia (Platts)--1Sep2010/632 pm EDT/2232 GMT

St. Louis-based Patriot Coal said it will have to spend at least $50 million to comply with a US district court's ruling that will require the Central Appalachian producer to reduce selenium discharges into water from two of its West Virginia mines. Environmental groups, which included the The Sierra Club, the Ohio Valley Environmental Coalition and the West Virginia Highlands Conservancy, filed suit in 2008 with the US District Court for the Southern District of West Virginia over alleged selenium discharges at Patriot's Ruffner surface mine in Logan County and its Hobet 22 operation in Lincoln County. The environmental groups won a temporary restraining order stopping work at the Hobet mine, prompting the company, groups and West Virginia regulators to reach a settlement agreement in March 2009 that allowed the company to continue mining operations. But the groups went back to court to argue that Patriot was failing to live up to its commitments under the agreement. Patriot said the court Tuesday found its Apogee mining subsidiary "in contempt for failing to comply with a consent decree issued in March 2009 requiring compliance with selenium limits in certain mining permits. Apogee was ordered, among other things, to install a biological-based fluidized bed reactor system to treat selenium discharges at certain affected outfalls and to come into compliance with applicable selenium discharge limits by March 1, 2013." The company also said the court ordered its Hobet subsidiary to "submit a treatment plan by October 1, 2010, and to come into compliance with applicable selenium discharge limits ... by May 1, 2013." According to the environmental groups, selenium is "a toxic element that causes reproductive failure and deformities in fish and other forms of aquatic life, is discharged from many surface coal mining operations across Appalachia, and is commonly found in coal combustion byproducts like coal ash." Patriot estimated that the court order would cost it $50 million in an initial investment required and annual operating costs of about $3 million. The court also required Patriot to establish a $45 million letter of credit to secure performance of its obligations under the order. -- Steve Hooks, steve_hooks@platts.com Similar stories appear in Coal Outlook. See more information at http://www.platts.com/Products/coaloutlook/