DEP delayed taking over dangerous, 300-acre dam operation
Wednesday May 8, 2002

Gary impoundment troubled from the start
By Ken Ward Jr.
STAFF WRITER

In January 1997, a company called Antaeus Gary Project Inc. offered McDowell County a great deal.

Massachusetts-based Antaeus said it would clean up two huge old coal slurry ponds, make a profit and provide jobs in one of West Virginia's most depressed areas.

Antaeus proposed to recover tiny coal particles, called fines, from the ponds, and sell them to blast furnaces.

Company officials promised 60 jobs for the 10-year, $70 million project.

Things didn't worked out exactly as planned.

By October 1999, Antaeus was bankrupt. Since then, two other companies that tried the coal fine recovery scheme have failed.

And now, state regulators have taken over the 300-acre operation near Gary.

On Friday, the state Department of Environmental Protection stepped in to prevent a dam failure that one DEP inspector said would have had "catastrophic" results.

Heavy rains overwhelmed the site's improperly maintained drainage system. A key drainage pipe apparently collapsed.

DEP officials warned downstream residents in about 250 homes to be on the alert because more rain could cause the entire dam to collapse.

DEP could have taken over the site long ago and avoided this emergency situation, agency records show.

In March 1999, one year after Antaeus took over the operation, DEP inspectors issued the first in a long series of citations for improper management of the site.

The company didn't have proper workers' compensation coverage, a problem that wasn't fixed until July.

A year after that, DEP inspector Arnold Fortner recommended that the state revoke Antaeus' permit and take over the facility to reclaim it.

"No action has been taken to abate violations," Fortner wrote in a Feb. 3, 2000, inspection report.

Month after month in his regular inspections, Fortner noted that violations for improper monitoring, poor drainage control and incomplete reclamation were not fixed. Several times, AEP shut off electricity to the site. Antaeus had no power for pumps to clean out sediment ponds meant to control runoff.

"Nothing has been done on site to abate violations," Fortner wrote in several inspection reports. "Forfeiture of permit and bond is imminent."

26 environmental violations

Still, DEP did not shut the operation down.

During a three-year period, between March 1999 and March 2002, DEP inspectors cited the Antaeus site for at least 26 environmental violations, according to agency records.

Under state mining rules, DEP can revoke a permit if a company is cited twice within a 12-month period. The Antaeus site recorded nearly nine violations per year.

Before it can formally revoke a permit, DEP must issue a "show-cause order." This gives the company a chance to argue why its permit should not be revoked.

In this case, DEP didn't issue a show cause order until Monday. DEP also issued an order to revoke the site's dam safety permits. The agency said that "making emergency repairs to the dam is necessary to safeguard life and property."

If DEP had taken over the site earlier, state officials could have made sure the drainage systems worked properly. They could have monitored the impoundments, and been sure that the dam itself was safe.

However, money for the work would have had to come from a state abandoned mine reclamation fund that is already tens of millions of dollars in debt.

Instead, DEP officials issued permits to allow new companies to try where Antaeus had failed.

DEP Secretary Michael Callaghan said Monday that he's been too busy trying to secure the site now to figure out what did or didn't happen in the past.

"I'm out here putting out a major fire right now," Callaghan said. "I haven't had a chance to go back and unravel that."

Callaghan promised that a full investigation would be conducted later.

Jeff McCormick, assistant chief for enforcement at the DEP Division of Mining and Reclamation, offered this explanation for the handling of Antaeus:

"Everybody knows that McDowell County is strapped for any kind of jobs. If somebody comes in with a viable project to create jobs by reprocessing this, and that would reduce the state's liability, I would say we're all for it.

"That's probably why the show-cause was never processed."

Matt Crum, director of the DEP mining division, said that wouldn't happen again. The site is shut down for good, he said, and the state will reclaim it.

"They're done," Crum said of the coal fine recovery projects at Gary.

The Greek river god

Twenty-five years ago, the Gary site was home to what may have been the largest coal preparation facility in the world.

U.S. Steel Mining Co. operated the Alpheus coal cleaning plant, named for the Greek river god.

To dispose of the huge amounts of coal waste generated, U.S. Steel built a pair of impoundments on Grapevine and Adkins branches, just north of Gary toward Welch.

The Grapevine Branch Impoundment was the larger of the two, with a 500-foot high dam.

Current DEP records do not indicate how much liquid slurry is typically stored in the impoundment. But Grapevine Branch, also called Pond 1, covers roughly 40 acres.

U.S. Steel Mining closed in the mid-1980s, and the Grapevine Branch impoundment sat idle.

At least twice over the next 10 years, companies tried to find a way to make money recovering the estimated 10 million tons of coal fines at the site.

The idea got its biggest boost when the U.S. Department of Energy helped fund research into coal fines recovery by Coal Technology Corp., or CTC, of Bristol, Va.

In February 1998, Antaeus bought CTC out of bankruptcy. Antaeus, named after the Greek god killed by Hercules, is part of an Australian company, Greenfields Energy Corp.

In an August 1998 news release, DOE said that the impoundment "cleanup is possible due to a new recovery process that could allow an energy company to make a profit by recovering coal from the ponds."

Contacted Tuesday, DOE spokesman Otis Mills said he wasn't aware of the Antaeus bankruptcy, let alone the spill or the impoundment safety problems.

"Yikes," Mills said. He added, "It's an old project. I think it's been dead for some time, so we have no insight into it."

Below Par operation

In August 2001, the DEP approved Antaeus' proposal to turn its permit over to a company called Below Par Inc.

Below Par is owned by Jay Childress, a coal consultant from Beaver. Childress believed he could make the coal fine recovery project work.

Three months later, in November 2001, Below Par was cited by DEP for not having a proper reclamation bond. The company that guaranteed Below Par's bond, Frontier Insurance, was declared insolvent and taken over by New York state regulators.

Over the next four months, through March, DEP inspectors cited Below Par for at least five environmental violations, records show.

In March, DEP dam safety engineer Joe Ross inspected the site and found that a decant pipe under the impoundment may have been plugged, and in danger of failing. If it did, he said, the embankment would fail. "If a substantial pool were present (which there is not at this time), the damage could be catastrophic," Ross wrote in his March 25 report.

On March 26, Crum ordered Below Par to investigate the matter. Crum gave the company 45 days to submit its report. The report was due this week.

Callaghan said that what Ross predicted is essentially what happened. Heavy rain added to the impoundment pool. This pushed down onto the plugged pipe, and shoved slurry out.

On Tuesday, Callaghan said that a private engineer hired by DEP had concluded that the embankment itself is probably not in danger of failing. Still, the engineer found, DEP is going to have to continue pumping slurry out of the structure to avoid more blackwater spills.

Callaghan said he's not satisfied, and wants to take more steps to ensure the dam is safe.

"I'm always going to be concerned about it, regardless of what an engineer tells me," he said. "I'm always going to be scared to death."

Callaghan said he is particularly concerned about where to find the money to properly reclaim the Gary site.

"At the end of the day, U.S. Steel walks away," Callaghan said. "It's not fair for that burden to be forced back on the taxpayers."

DEP records show that Antaeus posted a reclamation bond of only $700,000 when it took over the Gary permit. Preliminary estimates show it could take $5 million to reclaim the site.