Court asked to vacate deal negotiated in secret with Nally & Hamilton

Groups challenge public's exclusion from secret negotiations

An agreement negotiated in secret between the Beshear administration and a major polluter in eastern Kentucky does little to protect the public or prevent future violations, claimed several groups representing Kentucky citizens who use water polluted by the company’s coal mining operations.

The citizens’ groups filed a petition in Franklin Circuit Court on Thursday asking that the agreement between Nally & Hamilton Enterprises and the Kentucky Energy and Environment Cabinet be vacated on the grounds that there is “no factual evidence in the record, much less substantial evidence, [that] supports a finding that the Agreed Order is a fair resolution of Nally’s thousands of [Clean Water Act] violations, or that it will be an effective deterrent of future violations.”

The agreement was approved by cabinet Secretary Len Peters in November, despite the objections of the groups and despite their exclusion from the negotiating process.

“It is clear that the Kentucky Energy and Environment Cabinet is acting in its own best interest and the best interest of the coal industry rather than trying to protect the people and environment of Kentucky,” said Eric Chance of Appalachian Voices. “This settlement creates the appearance that the cabinet is doing its job while letting Nally & Hamilton off the hook for a huge but unknown number of serious violations.”

Nally & Hamilton Enterprises, based in Bardstown, is one of the largest producers of coal in Kentucky. They primarily use the controversial practice of mountaintop removal, where mountains are destroyed to reach thin coal seams. The remaining rubble is then dumped in the valleys and streams below.

Several principal officers and employees of Nally & Hamilton and their spouses contributed $6,000 to Beshear’s re-election campaign on July 21, just two weeks after the citizens groups were allowed to intervene in the case, according to the Kentucky Registry of Election Finance.

The case began in March when Appalachian Voices, Kentucky Riverkeeper, Kentuckians For The Commonwealth (KFTC), and Waterkeeper Alliance, represented by Natural Resources Defense Council, gave notice to Nally & Hamilton that they planned to sue the company for 12,000 violations of the Clean Water Act, which occurred over a two-and-a-half-year period. The violations related to discharges from many of the company’s coal mining operations in eastern Kentucky and involved false and incomplete pollution discharge reports submitted to the cabinet.

Cabinet officials, who had previously ignored these reports, finally reviewed Nally & Hamilton’s discharge reports after receiving the notice letter and in May filed an administrative enforcement action against the company. It seems that the cabinet did this in an effort to protect the company by trying to pre-empt a federal lawsuit the groups planned to file. The administrative action had no preemptive effect under the law, however, and the groups filed the federal suit anyway.

The groups also asked to intervene in the administrative proceeding, and in July the hearing officer granted the groups intervenor status, making them full parties in the case. However, cabinet officials ignored the hearing officer's strong encouragement to include intervenors in settlement negotiations and negotiated a settlement with Nally & Hamilton without notifying or involving the intervening parties.

“There are so many loopholes in this secretly crafted document, it becomes strikingly offensive to anyone the least bit familiar with Clean Water Act rules. This Agreed Order represents business as usual between cabinet officials and a scofflaw coal company, literally at the expense of citizens’ lives and well-being,” said KFTC member Suzanne Tallichet. “We are contesting this agreement because citizens living in coal-impacted communities deserve much better from a taxpayer supported state agency that is supposed to be diligently protecting people over corporate profits.”

As stated in an October letter to Peters, and repeated in Thursday’s court filing, the agreement falls short because (among other things):

• the cabinet seems not to have investigated the possibility that Nally & Hamilton’s violations were the result of intentional fraud;
• there is no evidence that the cabinet calculated what civil penalty amount is necessary to deter future violations (the fines were less than 1% of what they could have been);
• the agreement does not list or even describe what violations are being resolved; so it isn’t clear the cabinet even knows what violations this settlement would resolve;
• the agreement leaves most remedial measures completely undefined, requiring only that Nally & Hamilton submit proposed remedial measures after the agreement is signed; this makes it impossible to determine whether those remedial measures will fix Nally & Hamilton’s violations.

“The Kentucky Environment Cabinet needs to get out of the coal business and do their job protecting the public. This is just common sense,” said Pat Banks of Kentucky Riverkeeper. “Instead they ignored the hearing officer’s order giving us intervenor status and negotiated a secret agreement that does little to protect our people or prevent future violations. Our people are shocked that the cabinet chooses to protect companies that are polluting our land and water and breaking the laws thousands of times rather than protect the health and well-being of Kentucky’s land and people.“

“The people of Kentucky deserve to know what is being dumped into their waters. Nally & Hamilton has been submitting false data and releasing unknown amounts of pollutants for at least five years and the cabinet thinks this warrants a minor slap on the wrist,” added Chance.

The petition asks the Court to order the cabinet to produce factual evidence supporting the agreement and an explanation of how it will adequately remedy past violations and deter future violations. Failing that, the case should be returned to the Hearing Officer for additional fact-finding and adequate remedies to protect the public interest.

Last week, without notice or reason, Peters fired Natural Resources Commissioner Carl Campbell just as Campbell was preparing to travel to a meeting with Nally & Hamilton. “How can we expect to see effective enforcement of environmental laws against coal companies if top cabinet officials have to choose between protecting the environment and protecting their jobs?” asked Chance.

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Copy of Intervenors Petition for Review

CONTACTS:
Pat Banks, Kentucky Riverkeeper – 859-527-3334, [email protected]
Suzanne Tallichet, Kentuckians For The Commonwealth – 606-776-7970, [email protected]
Eric Chance, Appalachian Voices – 828-262-1500, [email protected]
Peter Harrison, Waterkeeper Alliance – 212-747-0622 ext. 32, [email protected]