Franklin Circuit Court Judge Phillip Shepherd ruled today that a proposed settlement between the Kentucky Energy and Environment Cabinet and Frasure Creek Mining is grossly inadequate in terms of its ability to deter the coal mining company from committing strip mining violations that pollute nearby waterways.

In 2010, environmental groups discovered Frasure Creek Mining had not only committed many clean water violations by exceeding the limit for coal mining runoff, it had fabricated reports to state regulators in the cabinet of Gov. Steve Beshear. After initially fining Frasure $310,000 for the violations — what many called a slap on the wrist — the cabinet was forced to allow the environmental groups to intervene in the case.

Today, Judge Shepherd blasted the Energy and Environment Cabinet for being primarily concerned with Frasure’s financial interests instead of the public and the environment, essentially creating an enforcement system in which Frasure had more of an economic benefit to violate the law than comply with it, making deterrence inadequate. Shepherd went on to state that by doing so, “the Cabinet sends the message that cheating pays.”

Here is one section from Shepherd’s ruling (the full ruling can be read at the bottom of this post):

“The Court concludes that the consent decree negotiated by the Cabinet and agreed to by Frasure Creek is not fair, reasonable, or in the public interest for the reasons stated above. This conclusion is further supported by inescapable reality that reporting violations so systemic and pervasive almost inevitably lead to degradation of the environment. The reason for the reporting requirement is to prevent pollution in the first place. When one company so systematically subverts the requirements of the law, it not only jeopardizes environmental protection on the affected permits, it creates a regulatory climate in which the Cabinet sends the message that cheating pays. This puts the many companies that comply with the law at a competitive disadvantage. The consent decree before the Court fails to impose penalties that would deter this conduct, and it further fails to recognize the important role of the public and interested citizens in monitoring enforcement and ensuring that this conduct will not be repeated, a concern that is especially heightened here in light of the Cabinet’s admissions as to its lack of personnel and budget resources.”

The intervening plaintiffs in the case are Kentuckians for the Commonwealth, Kentucky Riverkeeper, Waterkeeper Alliance, and Appalachian Voices. Lauren Waterworth, the attorney for Appalachian Voices, tells Insider Louisville that Shepherd’s ruling “is a major victory for the citizens of Kentucky.”

“What the court is saying is that the proposed settlement that the Cabinet and Frasure Creek put before the court is inadequate, it is not sufficient to uphold the goals of the Clean Water Act, it is not sufficient to remediate environmental issues, and it wasn’t sufficient to deter Frasure Creek from violating again,” says Waterworth.

In a press release, Energy and Environment Cabinet spokesman Dick Brown blamed Kentucky’s General Assembly, which has dramatically cut the budget for environmental regulators:

We agree that the Commonwealth has an obligation to monitor and enforce regulations and laws related to mining.  The EEC has funding needs as do many state programs, and the process for considering all the needs of state programs is in the biennial budget process, in which the requests for funding always exceed the state’s available capacity.  The Governor and legislators weigh those requests during the budget process so that all areas can be thoughtfully considered in the development of a balanced budget.

On multiple occasions, Sec. Peters and representatives of the EEC 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.  Additionally, demand for services is increasing, which further strains limited resources.

The Cabinet will continue to manage available resources to fulfill critical service needs.  Ultimately, the funding challenge reinforces the need to reconsider how to pay for state services.

Last week, the same environmental groups released new findings that Frasure has committed the same violations over the past two years, exceeding pollution levels and submitting false reports to the EEC.

“The Cabinet continues to ignore widespread false reporting, both in their news release and in their enforcement action,” Eric Chance of Appalachian Voices told the New York Times last week. “Their enforcement may look good on paper, but it’s a facade.”

Judge Shepherd order in Frasure Creek Mining case