ICG will be required under the agreement to pay $US575,000 in penalties, $335,000 to the PRIDE environmental initiative and $240,000 to the state Department of Natural Resources to cover the costs of a water study that estimated the environmental impact of proposed mining operations.

Franklin County Circuit Court judge Phillip Shepherd must approve the deal before it can be completed, the news service said.

Kentucky Department for Environmental Protection commissioner R Bruce Scott told local newspaper the Courier-Journal that the agreement covers penalties assessed by the DEP from 2008-2012.

“The cabinet is pleased that the Clean Water Act enforcement action that the cabinet initiated against ICG two years ago has reached an agreement with the company and the intervening parties,” he said.

“The agreement affirms the cabinet’s previous assessment of civil penalties and remedial measures to ensure compliance with the Clean Water Act requirements.”

International Coal Group was purchased by Arch Coal in 2011, but Arch officials said it was also pleased to bring the matter to a close.

“We’ve already identified and addressed the issues at these operations to ensure rigorous standards are met, including intense oversight of water discharge sampling and analysis procedures with a comprehensive management system and certified third-party laboratories,” spokeswoman Kim Link said.

According to the AP, environmental groups Appalachian Voices, Waterkeeper Alliance and Kentucky Riverkeepers lauded the proposed settlement; the trio initially alleged that companies falsified state-submitted water quality reports and that they had found more than 2,700 violations equating to millions worth of fines. The case which followed focused on discharge reports at several mines in eastern Kentucky.