Lab official admits faking coal water quality reports

A Raleigh County man pleaded guilty Thursday to repeatedly faking compliant water quality standards for coal companies, in a case that raises questions about the self-reporting system state and federal regulators use as a central tool to judge if the mining industry is following pollution limits.

John W. Shelton, 47, of Daniels, admitted to a charge of conspiracy to violate the federal Clean Water Act, saying he diluted water samples, substituted water he knew to be clean for actual mining discharges and did not keep water samples refrigerated, as required by state and federal rules, court records show.

Shelton was a field technician, and then a field supervisor, for Appalachian Laboratories Inc., a Beckley company that was certified by the West Virginia Department of Environmental Protection to sample and analyze water discharges from mining operations as part of the Clean Water Act program.

In a criminal charge filed in early September, Assistant U.S. Attorney Blaire Malkin alleged that Shelton took part in a conspiracy from the time of his hiring at Appalachian Laboratories, in 2008, through at least June 2013.

“The objects of the conspiracy were to increase the profitability of Appalachian by avoiding certain costs associated with full compliance with the Clean Water Act and to maintain and increase its revenue by providing its customers and the agencies regulating those customers with reports purporting to show that those customers were operating their sites in compliance with the CWA and thereby allow those customers to avoid fines and other costs associated with bringing their operations into compliance with the CWA and thus encourage and maintain for Appalachian the patronage of those customers,” the charging document alleged.

U.S. Attorney Booth Goodwin said, “We all depend every day on having a clean, safe water supply. That’s something we were harshly reminded of earlier this year in Charleston. It’s unconscionable to cheat the system that’s supposed to ensure clean water for our citizens and our waterways.”

Appalachian Laboratories officials did not return a phone call seeking comment for this story. Other coal industry officials also did not respond to a request for comment.

In an agreed-to “stipulation of facts” filed in court Thursday, prosecutors and Shelton said that, throughout his time with the company, another Appalachian Laboratories official — referred to as “First Known Person” — stressed to him the importance of “pulling good samples,” a term that was understood to mean samples that would comply with permit limits, not necessarily samples that were taken properly.

Among other things, the stipulation says that employees of Appalachian did not maintain water samples at the proper temperature, by putting them on ice in coolers, unless they knew that DEP inspectors were in the area.

Shelton and other Appalachian employees “falsified and rendered inaccurate” water samples by diluting them with distilled water or replacing them with water they knew to be in compliance with permit standards, according to the stipulation. The document says that Appalachian officials used the term “honeyhole” to refer to water from certain sites that would always test within permit limits and could be used in place of or to dilute “bad water.”

“Each time that Shelton and others at Appalachian diluted the sample water or replaced the sample water with water that would pass, they allowed water that they believed exceeded permit limits to discharge into the waters of the United States,” the stipulation stated.

Shelton pleaded guilty Thursday afternoon before U.S. District Judge Irene Berger and was released on $10,000 bail. He faces up to five years in jail and a fine of up to $250,000 when he is sentenced on Feb. 26, 2015.

“This is an important case and the investigation will continue,” Goodwin said. The probe is being jointly conducted with the FBI and the U.S. Environmental Protection Agency.

David McLeon, special agent in charge of the EPA’s regional criminal enforcement program, said Shelton’s plea “demonstrates that laboratories and their senior managers who callously place the American people at risk by submitting false reports will be held accountable.”

Prosecutors said Appalachian does water sampling for more than 100 mine sites in West Virginia. Court records, though, do not indicate which mining operations were involved in the falsified samples or how widespread a problem Shelton’s plea indicates exists.

Under the Clean Water Act, companies with water pollution permits are required to take periodic samples and submit reports to the DEP on whether those samples indicate their operations are in compliance with allowed pollution discharge limits. State and federal agencies take some samples themselves, but the majority of sampling is done by companies, with results filed with the government for its review.

Problems with this system have come up before in West Virginia. In 2008, after federal officials sued Massey Energy over widespread water violations at its mines in the state, DEP officials revealed that, for about five years, they had not been monitoring the discharge reports filed with them by the coal-mining industry. Agency officials said that problem has been remedied.

Derek Teaney, senior staff attorney with the group Appalachian Mountain Advocates, said the DEP — the state agency with primary Clean Water Act responsibility in West Virginia — needs to investigate what was going on with Appalachian Laboratories. Teaney said the DEP should audit any water quality sampling performed by Appalachian Laboratories and, perhaps, do an increased program of its own sampling at mines that could have been involved.

“The whole Clean Water Act system relies on self-reporting,” said Teaney, whose group monitors coal industry compliance and files lawsuits against water quality violators. “If that self-reporting can’t be trusted, then the system just falls apart.”

Kelley Gillenwater, a spokeswoman for the DEP, said the agency gave federal investigators all the results it had from water sampling performed by Appalachian Laboratories.

“We haven’t, at this time, conducted any additional testing at those sites because of these allegations but have continued with our routine field sampling,” Gillenwater said.

The DEP Division of Mining and Reclamation’s goal for each quarter is to conduct its own field sampling for at least 25 percent of water pollution outlets, so that all outlets are sampled at least once annually, Gillenwater said.

Reach Ken Ward Jr. at, 304-348-1702 or follow @kenwardjr on Twitter.

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