According to the complaint, the remediation costs arose after Judge Robert Chambers, of the U.S. District Court for the Southern District of West Virginia, ordered in August 2010 that Patriot Coal spend tens of millions of dollars to clean up selenium pollution at two of its surface coal mines in West Virginia. Sometime in February 2012, the SEC began questioning the company’s accounting for certain of its court-ordered selenium water treatment obligations.
In response to the comments received from the SEC, the defendants were forced to reveal that Patriot’s 2010 and 2011 financial statements were inaccurate. Patriot admitted that it was necessary to restate the financial statements to accrue a liability and recognize a loss for the estimated costs of installing the court-ordered water treatment facilities. This restatement increased Patriot Coal’s asset retirement obligation expense and net loss by $23.6 million and $49.7 million for 2011 and 2010, respectively.
