Lawyers for the state Department of Environmental Protection have reached a $15 million deal to resolve a lawsuit that targeted high-ranking former Alpha Natural Resources officials for potential cleanup liabilities if the reorganized Alpha doesn't manage to survive financially, possibly leaving hundreds of mine sites around the state unreclaimed.
Under the deal, the DEP agreed to dismiss its legal complaint and release former Alpha officials, including former CEO Kevin Crutchfield, from any potential liabilities. In exchange, Alpha agreed to post its headquarters building in Julian, Boone County, as collateral for remaining reclamation obligations in West Virginia. The building recently was appraised for $6.3 million, officials said.
In addition, the new company Contura - formed as part of Alpha's bankruptcy court reorganization - agreed to post a $4 million letter of credit and guarantee another $4.5 million for Alpha's obligations. The letter of credit and guarantee both run through the end of 2018, at which point Alpha officials expect the company's financial condition to improve.
A term sheet describing the settlement was filed Tuesday in U.S. Bankruptcy Court in Richmond, Virginia. Separate press releases were then issued by the DEP, Alpha and Contura.
The settlement resolves a complaint that the DEP filed against Alpha and its former executives in response to a disclosure by Alpha of about $100 million in what the company called "unaccounted for obligations." That amount didn't represent $100 million in unfunded reclamation liabilities. But coming just four months after Alpha emerged from bankruptcy, it raised new fears at the DEP that the company was at further risk of financial failure.
"The settlement provides the state with significant additional bonding and other security to ensure that reclamation will be done," said DEP Secretary Randy Huffman. "It also helps to ensure that Alpha will remain a viable operating company with sufficient resources to perform required land reclamation and water treatment."
The DEP had filed a strongly worded legal complaint, in which agency lawyer Kevin Barrett referred to the amount of Alpha's unaccounted for obligations as "whopping," said the issue "is devastating" and "seriously threatens" the reorganized company's ability to perform its legal obligations to reclaim remaining mining sites.
In the Alpha bankruptcy, most of the company's larger and more valuable properties - primarily in the western U.S. - were transferred during the court-approved reorganization to Contura Energy, a new company formed by Alpha's major lenders and now led by former Alpha CEO Kevin Crutchfield. The reorganized Alpha was left with 17 mines and seven preparation plants in West Virginia and Kentucky.
Reach Ken Ward Jr. at kward@wvgazettemail.com, 304-348-1702 or follow @kenwardjr on Twitter.