FRANKFORT, Ky. (AP) — A coal company facing fines for water quality violations in eastern Kentucky says it is no longer mining coal in the state, and its financial problems have kept it from resolving a court-ordered mediation over the penalties with state officials and environmental groups.

Frasure Creek Mining of Scott Depot, W.Va., which has about seven mining complexes in Kentucky, has no income, Michael Haines, general counsel for Kentucky's Energy and Environment Cabinet, said Monday.

Attorneys met in Franklin County Circuit Court to discuss the status of the case, which began in 2010 when environmentalists pointed out questionable water quality monitoring practices by Frasure Creek and another coal company, International Coal Group. Frasure Creek said Monday that it is willing to pay $310,000 for the past violations, which is the original amount demanded by the state before it was challenged by environmentalists in court.

Environmental attorney Mary Cromer said Frasure Creek should have to prove its financial woes to the court.

"Frasure Creek should not be able to get out of having to pay any penalties just because they say they're in financial trouble," said Cromer, an attorney with the Appalachian Citizens Law Center in Whitesburg, Ky.

Cromer said the environmental groups remain opposed to the original $310,000 settlement that the state negotiated with Frasure Creek.

That settlement came about after the environmental groups alleged the violations by ICG and Frasure Creek. The groups challenged the settlement in court, which included $350,000 in fines for ICG, saying it wasn't steep enough for what it said were thousands of water quality-related violations.

Franklin Circuit Court Judge Phillip Shepherd allowed the groups to intervene and become a party in the case. He later ordered the environmental groups, the two coal companies and the Energy and Environment Cabinet into mediation that lasted about a year.

ICG reached an agreement earlier this month to pay $575,000 for the violations, and that agreement included stipulations for any future violations.

Frasure Creek's efforts at mediation failed. Court records said the company was working to sell off its Kentucky assets.

An attorney for Frasure Creek, Jack Bender, told Shepherd the company is still willing to honor its original $310,000 agreement.

Haines said the cabinet feels the original fine total is a "fair and reasonable" amount for the violations, which dealt with Frasure Creek's monitoring of water quality at its mining sites.

Cromer argued the original agreement doesn't do enough to address pollution problems at the mining sites.

Cromer said the groups should also be allowed to look at the assets of Essar Minerals, which is part of the India-based conglomerate Essar Group, the owner of Frasure Creek's parent company, Trinity Coal. Cromer is representing the environmental groups Appalachian Voices of Boone, N.C., the New York-based Waterkeeper Alliance, Kentuckians for the Commonwealth and Kentucky Riverkeepers, along with four eastern Kentucky residents.

Frasure Creek is asking Shepherd to accept the original $310,000 fine amount. Shepherd said on Monday that he would issue a ruling promptly.

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