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UPDATE 1-Miner Alpha settles with U.S. over coal pollution violations

(Adds detail of complaint, DOJ comment, company response, background on recent spills, share price)

WASHINGTON, March 5 (Reuters) - Alpha Natural Resources Inc. , one of the largest U.S. coal producers, has reached a consent decree to settle a complaint about pollution discharged by coal mines into Appalachian rivers and streams, federal authorities said on Wednesday.

The U.S. Department of Justice and Environmental Protection Agency said Alpha will spend about $200 million to install and operate wastewater treatment systems and to implement comprehensive upgrades to reduce the level of pollution from mines in Kentucky, Pennsylvania, Tennessee, Virginia and West Virginia.

Overall, the settlement covers about 79 active mines and 25 processing plants in the five states, operated by Alpha, Alpha Appalachian Holdings (formerly Massey Energy) and 66 subsidiaries.

The companies also will pay a civil penalty of $27.5 million for thousands of permit violations - the largest ever under Section 402 of the Clean Water Act - to be divided among the federal government and state agencies.

"The unprecedented size of the civil penalty in this settlement sends a strong deterrent message to others in this industry," said Robert Dreher of the Justice Department's Environment and Natural Resources Division.

The government had alleged that between 2006 and 2013, Alpha and its subsidiaries routinely violated limits in 336 of its state-issued Clean Water Act permits.

That resulted in the discharge of excess amounts of pollutants into hundreds of rivers and streams across five states.

Communities across Appalachia "have too often been vulnerable to polluters who disregard the law," Dreher said. "It holds Alpha accountable and will bring increased compliance and transparency among Alpha and its many subsidiaries."

The EPA said the upgrades will reduce the discharge of total dissolved solids by more than 36million pounds per year and cut metals and other pollutants by approximately 9 million pounds per year.

In a release, Bristol, Virginia, based Alpha said its compliance with water quality statutes was 99.8 percent in 2013.

"That's a strong record of compliance, particularly considering it's based on more than 665,000 chances to miss a daily or monthly average limit. But our goal is to do even better," Gene Kitts, Alpha's senior vice president of environmental affairs, said in a statement.

As part of the settlement, the companies must also maintain a database to track violations and compliance efforts, and improve the timeliness of responding to violations.

In recent weeks two high-profile cases have focused attention on the issue of drinking water safety.

Thousands of tons of coal ash from a Duke Energy Corp plant fouled the Dan River in Eden, North Carolina, last month. In January, a chemical spill from a coal plant near Charleston, West Virginia, contaminated the drinking water of about 300,000 residents.

The EPA's complaint did not allege that Alpha's violations posed a risk to human health.

"The public expects that regulators ensure that water quality is protected and that companies comply with their permits," Kitts said. "That's the way it should be."

Alpha Natural Resources closed at $5.24 per share, down 1.3 percent, on the New York Stock Exchange.

(Reporting by Ros Krasny; Editing by Bill Trott)

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