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Selenium Pollution at Coal Mines Could Spell Trouble at Alpha

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New research details risk to investors from environmental lawsuits
Monday, February 4, 2013

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SAN FRANCISCO—New research released today in a Coal Risk Update by the Rainforest Action Network (RAN) details how selenium discharges could expose Alpha Natural Resources to financial risks from water contamination at mountaintop removal mines. In 2012, environmental groups filed four separate lawsuits alleging repeated pollution violations at mine outfalls that could cost the company millions.

The legal fights over selenium pollution come during a challenging time for the US coal market and after Alpha announced plans to idle eight mines, reduce its workforce by ten percent and reduce expenses by $150 million.

“The research released today should sound warning bells to investors that Alpha faces significant financial risks from selenium litigation,” said Ben Collins, research and policy campaigner at Rainforest Action Network and the author of the report. “If current lawsuits against Alpha prove successful, it could face costly cleanup obligations.”

RAN’s Coal Risk Update concludes that investors would benefit from additional selenium disclosure by Alpha, highlighting the recent clean up costs faced by Patriot Coal, which filed for bankruptcy last year and reported $447 million in selenium compliance obligations. While Alpha’s liabilities remain measurably less than Patriot’s, they present a significant risk to investors, according to the report.

“The bankruptcy of Patriot coal illustrates the danger of managing selenium compliance in the courtroom rather than in the boardroom,” continued Collins. “Alpha can leave its exposure to selenium non-compliance risk to be handled by its lawyers, but it does so at considerable risk to its investors.”

Selenium is a mineral found in rock and soil and is discharged from mountaintop removal mine sites in Appalachia. Although it is a needed micronutrient in small quantities, it becomes toxic to humans in high concentrations and can cause deformities and reproductive failure in aquatic species.

Research in RAN’s Coal Risk Update includes the analysis of six years of water monitoring data from the West Virginia Department of Environmental Protection for both Alpha and Patriot. Findings indicate Alpha’s vulnerability to both regulatory enforcement and third-party lawsuits. For Alpha, violations at eleven mine monitoring sites resulted in dozens of selenium concentration violations.

Today’s release represents the first in a new series of research updates by the Rainforest Action Network on the environmental and social risks involved with investment in the coal industry. The periodic updates will highlight emerging risks faced by companies involved with coal extraction, processing, or combustion.

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Rainforest Action Network runs hard-hitting campaigns to break North America’s fossil fuels addiction, protect endangered forests and Indigenous rights, and stop destructive investments around the world through education, grassroots organizing, and non-violent direct action. For more information, please visit: www.ran.org

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