Connect with us

Coal

Powering Down: Ohio Community Reckons with Coal Plant Closure

Published

on

The Conesville power plant is slated to fully shut down in May 2020. Photo: Brittany Patterson/Ohio Valley ReSource

This article was originally published by the Ohio Valley ReSource.

Brick buildings line the wide sidewalks of Main Street in downtown Coshocton, Ohio. On a recent spring day the dogwood trees are blooming. Bright red and white tulips dot the grassy public square, home to the local courthouse and a gazebo.

Listen to the story from the Ohio Valley ReSource.

There are barber shops, an optometrist, a florist, a railroad-themed steakhouse is open for lunch. A trendy public art installment features a small roller coaster designed and built by the local high school and a marquee that blinks “be nice to others.”

But there are also vacant buildings.

Paula Wagner has lived in Coshocton for more than 40 years. She taught Spanish at a local high school for 35. Standing on Main Street, she says Coshocton has been a wonderful place to live, but it isn’t thriving like it once was.

A train runs through downtown Coshocton, Ohio. Photo: Brittany Patterson/Ohio Valley ReSource

“We still have some businesses, but I think every time one of these big businesses goes out, it takes so many people too,” she said. “They have to move to find jobs outside of town, or they’ll move their whole family.”

In recent years, thousands of jobs have been lost as major employers like General Electric, automotive mat maker Pretty Products, and a WestRock paper mill have closed their doors in the region.

Now, Coshocton is bracing for another blow. At the end of May, two of the three remaining units of American Electric Power’s Conesville Power Plant went dark. The last unit will shutter in May 2020, years earlier than expected. Coshocton is joining the growing list of Ohio Valley communities where coal plants are powering down.

“It’s an integral part of the community,” Denise Guthrie, owner of Mercantile on Main, said of the power plant, which has been operating here for over 60 years. Her shop has for 20 years sold vacuum cleaners and cotton quilting materials. Guthrie, a Coshocton native, greets everyone who comes through her doors like she knows them, largely because she does. Many of her customers, or their families, have worked at the power plant.

“We’re hurting,” she said. “You can physically see that there’s empty buildings, and that’s hard …I remember what it was, you know, but that was the past.”

Guthrie knows first-hand what that loss looks like. Her husband was laid off when the paper mill closed.

“It’s like, bam, bam, bam, you know, our community is hit, you see that,” she said.

Located in eastern Ohio, Coshocton has a mix of rural landscape and industrial labor common to much of Appalachia. It has rolling green hills and the occasional farm stand, but it’s also a place where people take pride in making things. And like so many communities in Appalachia, coal mined here, then later burned here to make electricity, shaped the fabric of this community, and helped give rise to its industrial roots.

In recent years, the community has tried to diversify.

“We have a lot to offer,” said Guthrie. Local wineries have banded together to create a wine trail, and a brewery has opened. Visitors can visit historic Roscoe Village, a restored 19th Century canal town, and hunting and fishing opportunities abound. Coshocton County is home to Kraft Heinz, the country’s largest bacon manufacturer, and American flag producer, Annin Flagmakers, as well as more than a dozen smaller manufacturers.

County and local officials haven’t been sitting idly by as Conesville’s retirement approaches. But as many communities in Appalachia have found, the loss of a coal-fired power plant is a major blow, even in places like Coshocton that are used to dealing with loss.

“I will say, we’re resilient, we’ll survive, we’ll find jobs, somehow we find jobs, we find new opportunities,” Guthrie said. “But it is a concern.”

Closing Conesville

The Conesville power plant began burning coal to create electricity in 1957. Over time, the plant grew to include six coal-fired boilers and could generate 1,590 megawatts of power.

The plant was a significant purchaser of Ohio coal, much of it mined by now-bankrupt Westmoreland Coal Company. At its peak, the plant employed 600 workers.

Plant Manager Ryan Forbes has worked at Conesville for 12 years. He will now oversee its closure.

“I’ve had four family members make lifelong careers here at Conesville, so it’s definitely close to me,” he said.

Shortly after he took the job, AEP announced it was moving up the timetable for the plant’s closure by two years.

Units 5 and 6 at the plant, which were originally scheduled to shut down in 2022, are closing now. Unit 4 is scheduled to close in May 2020. As of June 1, Forbes said, the plant will have 95 workers. They started the year with 160. About 25 employees have found other jobs elsewhere within the AEP system, and some are retiring.

Coshocton is not alone in facing a future without a coal-fired power plant. According to the U.S. Energy Information Administration, from 2007 through 2018, more than 500 coal-fired generators, representing roughly 22 percent of all coal-generated electricity capacity, retired. In the Ohio Valley alone, 34 coal-burning facilities closed from 2009 to 2017.

Cost is the biggest force in the decline of coal, as renewable sources and gas-fired generation are proving cheaper and more flexible.

And there are more closures to come. Utilities have announced the retirement of at least 36.7 gigawatts of coal-fired capacity through 2024 — 117 units in total, according to a recent study by the Institute for Energy Economics and Financial Analysis. Increasingly, utilities are moving up retirement dates for their old coal burners.

Communities in the Ohio Valley are expected to be hit especially hard. In addition to the Conesville closure, utility FirstEnergy Solutions is shuttering three power plants over the next four years. The Bruce Mansfield power plant in Beaver County, Pennsylvania, W.H. Sammis power plant in Jefferson County, Ohio, and Pleasants Power Station in Pleasants County, West Virginia, are all set to close by 2022. The Tennessee Valley Authority voted in February to close the last of the coal-burning units at its Paradise power station in Kentucky, after switching to a new natural gas generator two years ago.

“These are huge economic drivers in the regions that they’re in,” said Gilbert Michaud, an assistant professor of practice at the George V. Voinovich School of Leadership and Public Affairs at Ohio University.

Since 2010, eight coal-fired power plants have closed in Ohio alone. Michaud has studied the associated impacts of these closures.

“They employ hundreds of workers, they have this rippling effect through the use of vendors and supply chain … where they are really driving activity and creating jobs and a lot of ancillary industries too,” he said. “A lot of these rural communities that don’t have very diverse economies, these are core industries and core facilities that are really driving economic development and jobs in these regions.”

Michaud and colleagues published a study in February that examined the impacts of the closure of two Dayton Power and Light coal-fired power plants last year in Adams County, Ohio. They found the county and local government and school districts were set to lose $8.5 million in tax revenues due to the closures, 370 direct jobs and another 761 associated jobs.

Michaud said displaced coal plant workers have limited local options to find new employment.

“We did find that there were emerging industry clusters in things like tourism and rural healthcare, but the problem here is that these folks would face like a wage challenge if they were to transition to new careers altogether,” he said. “And so a lot of these folks have been moving away, both throughout Ohio and out of state altogether, unfortunately.”

Cutting School

Conesville lies just a few miles outside Coshocton. The power plant’s three massive smokestacks have been a fixture of the small town’s landscape for decades, alongside a convenience store, post office, and a school, Conesville Elementary.

River View Local School District Superintendent Dalton Summers said having the power plant in the district was a huge advantage.

“When you have a power plant in your district it’s almost a separate tax source,” he said.

Conesville Elementary depended on the power plant for revenue. Photo: Brittany Patterson/Ohio Valley ReSource

Until recently, Conesville was valued at $72.2 million, and it paid a significant amount of property tax and a state utility tax to the county and school district. Of River View’s $221 million annual budget, 10 percent comes from the power plant.

Because of that high level of local funding, Summers said River View has traditionally received less funding from the state. Still, the millions paid by the plant locally in taxes made that a worthwhile trade-off.

“River View was able to offer a lot of things that a lot of rural communities wouldn’t be able to offer,” he said, including eight advanced placement courses at the high school, three foreign languages, a swim team, and small class sizes.

The last time the district built a new school it didn’t have to ask local taxpayers to chip in. In fact, Summers said the district hasn’t asked for a new operating levy in more than 25 years.

In October 2017, the Ohio Department of Taxation devalued the plant from $72.2 million to $34.7 million, resulting in a $1 million revenue loss for the school district. When the plant is fully closed, the district is expected to lose $2.2 million.

“We tell people if you just take 10 percent out of your own income, you’re going to have to make adjustments to that,” he said. One adjustment: River View will close one of its four elementary schools next year. In order to avoid other cuts, Summers expects the district will need to ask for taxpayer support in the coming year.

Conesville’s closure is more than just a financial blow, he added. AEP has been a partner to the schools. If they needed something, they could call.

“It’s not going to just affect the school in the sense of money,” Summers said. “You know, we have a lot of employees, we have a we have a lot of kids’ parents that work for this plant, and this could cause relocation on their account.”

Summers said he thinks this closure, unlike some of the others the region has weathered, is different.

“Make no mistake it is a big impact. Any plant that closes in a small community is a big impact,” he said. “A plant like AEP, with the level of jobs that it did provide, the good livings people made that work there, the tax base to the schools  — it’s really big.”

United Front

Local officials are not sitting idly as the plant closes down.

Inside a former hotel now converted to office space, Coshocton Chamber of Commerce Executive Director Amy Stockdale sits with Tiffany Swigert, executive director of the Coshocton Port Authority, and Sherri Gibson, with Ohio Means Jobs Coshocton County.

“This group of ladies sitting right here, we have a really strong united front locally as to how we’re going to help our community through any type of loss,” Swigert said.

Sherri Gibson, far left, at a job fair in Coshocton, Ohio. Photo: Courtesty of Ohio Means Jobs Coshocton County

Each of these women work with the local business community. They’ve also each been personally affected by a past business closure in the region.

“We have had moments of heartache and then picked ourselves back up and said, ‘okay, we can pull through this, we’re going to be able to do it,’” she said. “And we’ve done it quite well in the past.”

As AEP prepares to close its doors, they have devised a multi-pronged plan to help the community that borrows heavily from their experience dealing with past manufacturing losses.

It includes working to identify sites for new manufacturers and cleaning up existing brownfield sites to boost the tax base. Swigert admits the efforts, driven in part by grant funding, are in the early stages.

For workers facing unemployment, Ohio Means Jobs and Coshocton County Job and Family Services have stepped in to offer resume writing and interviewing classes at the Conesville plant.

“I think it’s really important to recognize that these employees, a lot of them graduated high school and went straight to AEP afterward,” Swigert said. “It’s not that they don’t necessarily know how to interview or create a good resume, but they never had to.”

The local branch of Central Ohio Technical College hosts job fairs. Gibson said interest in employing laid-off AEP workers is running high.

“Just the initial rumors of AEP closing, the surrounding counties lit up on my phone because they know that these workers are loyal, and that they’re faithful and that they are skilled,” she said.

Heidi Binko, executive director and co-founder of the Just Transition Fund, a nonprofit that works with coal communities undergoing transition, said as a growing number of communities find themselves facing coal plant or mine closures, it’s smart to throw everything they have at what comes next.

“There is no one silver bullet, right?” she said. “There is not one thing that is going to work.”

Ohio University Professor Michaud agrees and said in Ohio local economic development organizations and others are heavily involved in supporting workers affected by coal plant closures. But he said his research has shown limited participation by workers.

Michaud has examined transition efforts by communities across the country and the world, and said many try to leverage local assets, such as tourism or agriculture, with varying levels of success. A coal plant closure, he said, is a uniquely large economic loss that is hard to get past.

“A lot of these communities, we found haven’t really fully been able to bounce back to what they once were after a large coal plant closes,” he said. 

He said rural communities with limited job options are wise to offer technical assistance, job training, and reemployment.

“Basically, give folks options so they aren’t forced to leave,” Michaud said. “I think that there’s a lot of people who really care about these issues, and that really love these rural Appalachian communities and counties, and that are trying to do things to help enhance the well being of the folks that live there and keep them in the region.”

Moving Forward

Joe Eggleston has worked at the Conesville plant for six years and he hopes to stay in Coshocton. He attended both a resume and interviewing class hosted at the plant by Ohio Means Jobs. During a mock interview, Eggleston used his quiet confidence to win over Gibson, even when she threw him a curveball question: “If you were a tree, what type would you be?”

Resources for job seekers at a recent job fair in Coshocton, Ohio. Photo: Courtesty of Ohio Means Jobs Coshocton County

Without missing a beat, Eggleston answered. “An oak,” he said, “very strong, very sturdy.”

“I like that,” Gibson grinned. When Eggleston mentioned he’d only missed two days of work in the last six years, she exclaimed, “You’re hired.”

Working at Conesville was a lifelong dream for Eggleston. His father worked there for 25 years before him, and he’s enjoyed his time at the plant.

“It is sad, you know, there’s been a lot of generations that went through here,” he said.

But he also isn’t worried about his last day; he’s confident he will find a job.

“I hoped it would last longer,” he said. “It is what it is, and I’m just going to move forward.”

Coal

W.Va. Governor’s Coal Group Top User Of Loophole Allowing Mine Lands To Sit Idle

Published

on

View of the Looney Ridge surface mine from atop Black Mountain. Photo: Brittany Patterson/Ohio Valley ReSource

This article was originally published by Ohio Valley ReSource.

Standing at an overlook on the top of Black Mountain — the tallest point in Kentucky —  the wooded Appalachian mountains stretch on like a sea of green for miles.

For many, this mountain is synonymous with the coal industry. It straddles the state line separating Harlan County, Kentucky, and Wise County, Virginia, two communities that have long relied on mining the black gold contained in its depths.

Among the lush forests, barren, brown spots dot the landscape, a testament to this history. These are coal mines, created when the tops of these mountains were removed. From the top of Black Mountain, one sprawling mine and its towering high wall dominate the view.

Matt Hepler of the advocacy group Appalachian Voices. Photo: Brittany Patterson/Ohio Valley ReSource

“So, we are looking currently looking at Looney Ridge surface mine number one,” says Matt Hepler, an environmental scientist with the advocacy group Appalachian Voices.

Hepler has for years been following the action, or lack thereof, at the Looney Ridge mine, which is operated by A&G Coal, a coal company run by the family of West Virginia Gov. Jim Justice.

Coal has not been produced here since at least 2013 when A&G Coal asked Virginia regulators to place the mine in what is called temporary cessation. The permit status allows mining to pause, giving mining companies flexibility on requirements for land reclamation until it becomes more economically feasible to begin extracting coal again. And, as the name implies, this idling of mines is supposed to be temporary.

An analysis of mine permit data conducted by the Center for Public Integrity finds Central Appalachia is home to about half of all idled coal mines in the country. CPI found more than 200 mines are idled across West Virginia, Kentucky, Tennessee and Virginia. About half have been that way for three or more years. Warehousing mines using this permit status throws workers and nearby communities into limbo all while crucial environmental cleanup is delayed.

Credit: Alexandra Kanik/Ohio Valley ReSource

The analysis shows that the Justice companies are the nation’s most frequent users of coal mine idling. Thirty-three mines and a coal preparation plant owned by the Justice family’s companies were idled as of mid-August. Fifteen of those have been in that status for at least three years, according to CPI’s analysis. In West Virginia, one Justice mine in McDowell County has been idled for almost a decade.

That number doesn’t include the Looney Ridge mine or others nearby in Virginia where coal also hasn’t been mined for years. That’s because in early 2014, state mining regulators entered into a compliance agreement with the Justices to force them to reclaim the site.

Hepler, with Appalachian Voices, said that agreement has not resulted in much actual reclamation. The Virginia Department of Mines, Minerals and Energy has amended the compliance agreement multiple times.

“It’s looked like this for as long as I’ve been coming up here,” he said, pointing to the same broken-down bulldozer that has been there for years.

Tarah Kesterson, a spokesperson with the Virginia DMME, said the agency is pushing the Justices to clean up the site and is actively monitoring the situation as well as conducting inspections.

“We are doing everything within our enforcement authority to ensure that this gets done,” she said.

In a statement, a spokesperson for the Justice companies defended the reclamation work and said idling permits is a standard practice across the industry.

But as the nation shifts away from coal toward more economic options for power generation, such as natural gas and renewable energy, some fear the use of mine idling can be used as a stepping stone to abandon mines, passing the responsibility for cleanup to the government and taxpayers.

Unreclaimed mine land on Looney Ridge, near the KY/VA border. Photo: Brittany Patterson/Ohio Valley ReSource

Community Impact

Idle mines, especially those left untouched for years at a time, can negatively affect the economy, health and environment of nearby communities.

“When mines become inactive or idle, they starve a local community, and they deprive the community of the coal mining jobs and other related jobs,” said Joe Pizarchik, former head of the U.S. Department of the Interior’s Office of Surface Mining Reclamation and Enforcement, the federal agency in charge of regulating surface coal mines, during the Obama administration.

Credit: Alexandra Kanik/Ohio Valley ReSource

When mines enter temporary cessation employment plummets. CPI’s analysis found coal operations that have been idled for at least three years had 85 percent fewer full-time employees after switching into idle status than they did a year before.

“It also puts that land in a totally non-productive state,” Pizarchik said. “It’s not making money on anything for anybody for the community, and it can be a potential pollution source.”

In addition to being unsightly, there are health and safety risks associated with leaving mines unreclaimed, said Emily Bernhardt, an ecosystem ecologist and biogeochemist and professor at Duke University’s Nicholas School of the Environment. Mines left idled can expose residents to coal and silica dust. They can also pose a risk for landslides and flooding. During surface coal mining, operators pile tons of rock and liquid behind earthen dams. When left idle, those impoundments face a greater likelihood of failing.

“You can’t actually make any improvements when you’re just sort of on hold,” Bernhardt said.

Who Pays?

Federal regulators have made two attempts since the 1990s to reform the way temporary cessation is used, according to public records obtained by CPI. Both have stalled. That’s despite a 2010 survey of state regulators that showed most states believed there should be limits on how long mines could be idled.

Federal law only requires that mining companies notify regulators when a permit will be in temporary cessation longer than 30 days.

Black Mtn. holds both natural beauty and scars of resource extraction. Photo: Brittany Patterson/Ohio Valley ReSource

State regulators can reject applications to change mines to an idled status if they find noncompliance or ongoing pollution. Kesterson with the Virginia DMME said before an operator can apply for temporary cessation, reclamation must be up to date. In Kentucky and Virginia, inspections continue while a mine is idled, and operators are fined if violations are found.

While in the past, mine operators may have used idling to pause production to allow coal prices to rebound, Pizarchik worries the nation’s shift away from coal means the chances of idled mines being cleaned up are shrinking.

“I believe it’s extremely unlikely that those mines will ever be activated again because the price of coal is never going to go up,” he said. “The demand is only going to continue to shrink.”

If operators walk away from idled mines, states could face challenges with mine reclamation depending on how coal mine bonds are regulated, and that could leave taxpayers on the hook for paying for reclamation.

In Virginia, for example, Justice mines have an estimated $200 million worth of cleanup liabilities, according to minutes from an April 2017 Coal Surface Mining Reclamation Fund Advisory Board meeting.

Credit: Alexandra Kanik/Ohio Valley ReSource

While Virginia is moving away from allowing coal operators to “self-bond” — or not put up a cash bond or buy a bond from an insurance firm if a company is deemed to be in good financial health — some A&G Coal permits remain self-bonded, Kesterson said. That means if the company were to go under, the state would get none of the money required for cleanup.

The state has in the past allowed coal companies to pay only partial bond amounts into a shared pool. The bond pool is meant to supplement cleanup for more than 150 permits, but the pool has less than $10 million cash.

“The reclamation would cost more than what we have in a pool bond,” Kesterson said of liabilities owed by A&G Coal. “So that’s why we’re trying to work with them, to get them to pay for the reclamation.”

Credit: Alexandra Kanik/Ohio Valley ReSource

Not all states are concerned. John Mura, spokesperson for the Kentucky Energy and Environment Cabinet, said in an email that only 10 percent of Kentucky’s coal mines, or 150 permits, are in temporary cessation.

CPI’s analysis examined federal MSHA data on idled mining permits and is likely an undercount of idled mines because state and federal data are incomplete and often not comparable.

Mura said that following an order in 2011 by OSMRE to reform the state bonding program, base bond amounts have increased by about 60 percent.

“Kentucky has made great strides to ensure that reclamation bonds are adequate to complete reclamation in the event of bond forfeiture,” he said.

As the industry contracts, more bankruptcies are likely, which can open the door for companies to walk away from mines where buyers can’t be found.

A truck enters a mine belonging to the now-bankrupt Revelation Energy. Photo: Brittany Patterson/Ohio Valley ReSource

That’s one concern currently playing out with the Blackjewel LLC bankruptcy, which has left more than 1,000 miners in Kentucky, Virginia and West Virginia without their last paychecks.

CPI’s analysis found Blackjewel and other subsidiaries owned by former CEO Jeff Hoops had 21 coal mines and related facilities temporarily idled as of mid-August, according to Mine Safety and Health Administration data, and seven of those had been paused for at least three years. Many of those mines have not been purchased since Blackjewel’s bankruptcy.

At least 16 additional operations owned by other companies in bankruptcy sit in idle status, all of them in Central Appalachia, according to federal data.

“Raped Out Mountains”

Retired coal miner and mine inspector Larry Bush knows firsthand how idle mines can impact the environment.

Bush lives below two Justice mines — one that is active and Looney Ridge. Sitting under a covered gazebo at a park in the town of Appalachia, Virginia, where he has lived almost his whole life, Bush said he sees the environmental toll unreclaimed mines can have on the environment.

Former miner Larry Bush lives near two large coal mines in Virginia. Photo: Brittany Patterson/Ohio Valley ReSource

“There’s a little stream that’s pretty much filled up with silt,” he said. “Nothing can live in it. I mean, there’s nothing, I don’t think.”

The 70-year-old Vietnam veteran is soft-spoken and sports a pair of reflective aviator glasses.

Bush wants to see this region rebound as the coal industry declines, but he struggles to see how that can happen with idled mines marking the landscape.

“If they’re not actively employing people, or actively working the site, they should be forced to do their reclamation work instead of just leaving raped out mountains,” he says.

This story was produced in partnership with High Country News and the Center for Public Integrity. CPI’s Mark Olalde contributed reporting and Joe Yerardi produced CPI’s data analysis.

Continue Reading

Coal

Coal Companies Belonging to W.Va. Governor’s Family Agree to Pay Overdue Taxes in K.Y.

Published

on

Gov. Jim Justice, R. W.Va., delivers his annual State of the State speech on Wednesday, Jan. 9, 2019, in Charleston, W.Va. Photo: AP Photo/Tyler Evert

This article was originally published by the Ohio Valley ReSource.

Coal companies controlled by the family of West Virginia Gov. Jim Justice have agreed to a settlement covering millions of dollars in overdue property taxes in four eastern Kentucky counties: Harlan, Knott, Magoffin and Pike.

Checks totaling $1.2 million from Justice entities began rolling in last week, county officials said. According to state officials, the checks cover half the delinquent debt owed. Counties will receive the remaining amount in payments over the next six months.

Property taxes, which dwindled as the region’s coal industry declined, are used to fund essential services such as schools, fire departments, sheriff’s offices and libraries. County officials say the unpaid taxes from the Justice companies forced layoffs and added to hardships in an economically struggling region.

NPR, The Ohio Valley ReSource and its partner stations reported in 2016 that the Justice companies had failed to pay more than $15 million in taxes and mine safety penalties in five states. Since then, the Justice companies have entered agreements to pay overdue taxes in West Virginia and, now, Kentucky. Federal prosecutors have also sued to recover millions in mine safety fines.

In a press release Monday, Kentucky Finance Cabinet Secretary William Landrum billed the agreement as a win.

“This settlement means the state and these counties no longer have to spend time, money and other resources on lawsuits that could take many years with no guarantee that the taxes would be paid,” Landrum said in the news release.

The agreement covers delinquent property taxes owed by three Justice family coal companies: Kentucky Fuels, Inc., Sequoia Energy, LLC, and A & G Coal, Inc. In exchange, suspensions sought by the Kentucky Department of Revenue on active mining licences issued to Kentucky Fuels will be lifted.

County officials, some of whom have fought the Justice organization in court to seek delinquent taxes, expressed mixed feelings about the settlement.

A representative for the Harlan County attorney’s office said Justice’s Sequoia Energy owes $141,179.36 in delinquent property taxes. Last week, the office received a check for about $93,000.

Pike County officials said last week Kentucky Fuels paid $177,497.10 to cover its 2017 and 2018 tax bills. The company owes about $252,000 in taxes from 2015 and 2016. Officials expect to receive six monthly payments of about $30,000, according to Tonnie Keene with the Pike County Attorney’s office.

“For us to collect that much money, that’s a good sum of money,” she said. “It’s paid off several years.”

Keene said it’s unclear if the county will have to write off any of the remaining debt after the six-month payment plan is completed.

“We won’t know until all these payments apply,” she said.

Pike County attorney Howard Keith Hall said he agreed to waive the penalties and interest for the amount covered in the settlement because it was a relatively small amount. Fees and penalties fund the county attorney office’s budget. He said over the years, Pike County collected more than $1.3 million from the Justice organization.

“We’re unique in that we’ve been able to collect so much,” Hall said.

“In a bad way

Knott County, Kentucky, was home to one of the larger Kentucky Fuels properties and had perhaps the most at stake with the delinquent tax bills, which totaled roughly $2 million according to an official in the county clerk’s office.

The rural county lacks other large sources of revenue and depends heavily on coal severance and property taxes to pay for schools, public safety and other services. Without the Kentucky Fuels payment the school system faced a shortfall and several county employees were laid off.

“We ended up having to let a couple of our deputies go,” Knott County Sheriff Dale Richardson said in a March interview. “We only had five full-time deputies and we’re down to three. That puts that much more burden on us and it really puts us in a bad way.”

Richardson said the situation is more galling because it was not the first time the county had to hound the Justice companies for payment. Officials had filed suit twice before against Kentucky Fuels and even moved to seize some company property to recover debts.

“It’s not these people’s first rodeo,” Richardson said.

Assistant County Attorney Randy Slone said the county received a check of roughly $818,000 and that the company has pledged to make monthly payments to cover the other half of what was owed for outstanding tax debt.  

But Slone noted that he has heard such promises before from the Justice companies.

“They have had agreements and not lived up to those,” he said. “But we are hopeful and we have not given up any rights, if they don’t comply we still have all the rights we had before.”

Slone said the delay in payment already caused considerable hardship for Knott County.

“At the end of the day we all have tax obligations whether you’re a billionaire or a regular Joe like me.”

Gov. Justice has an estimated worth of more than $1 billion and owned the luxury Greenbrier Resort in West Virginia in addition to the family mining companies. Since taking office he turned control of the companies to his daughter and son.

Justice v. Justices

The Kentucky tax settlement agreement is the latest in a string of recent legal actions concerning the Justice companies’ tax debts, business debts, and failure to pay mine safety fines.

Last week, the U.S. Department of Justice filed a motion seeking to hold Justice and his son, Jay Justice, personally responsible for a $1.23 million civil penalty levied against one of the family’s coal businesses, Justice Energy Company, Inc.

Federal prosecutors said depositions with company officials, including the governor’s son, revealed that Justice Energy was a shell company controlled by the Justices. Prosecutors argued the Justices were, in practice, the company and should pay the fine. On Friday, another Justice-controlled company, Bluestone Resources, Inc., stepped in to pay the penalty. The Justice Department agreed to drop the motion, but retains the right to revive it if Bluestone Resources fails to pay the fine.

In April, the Justice Dept. filed suit on behalf of the U.S. Mine Safety and Health Administration to recover $4.7 million in delinquent penalties from the Justice mining companies for unpaid mine safety violations. That action came one month after a data analysis by the ReSource showed that the Justice companies’ mine safety debts had grown by more than 50 percent since Gov. Justice took office. The Justice companies have the highest delinquent mine safety debt in the U.S.

The Justice companies are also in a long-running dispute with state and federal regulators regarding penalties for failure to repair old surface mines in Kentucky, Virginia, and West Virginia. One such mine in eastern Kentucky has been the scene of repeated flooding and mudslides which have damaged neighboring properties and roads.

The ReSource’s Jeff Young contributed to this report. 

Continue Reading

Coal

Facing Second Lawsuit From Federal Mine Regulators, Justice Coal Companies File Suit Of Their Own

Published

on

The October flood damage the road near the Thacker house. Photo: Sydney Boles, Ohio Valley ReSource

This article was originally published by Ohio Valley ReSource.

In apparent anticipation of a federal lawsuit seeking recovery of overdue penalties, coal companies owned by the family of West Virginia Gov. Jim Justice have filed a lawsuit of their own against federal surface mining regulators.

The suit, first reported by WV MetroNews, is an apparent preemptive strike against the federal government, which is preparing to sue the companies over unpaid fines associated with more than 100 environmental and reclamation violations at mines in West Virginia, Virginia, Tennessee and Kentucky.

According to the lawsuit, negotiations between officials from the U.S. Department of the Interior’s Office of Surface Mining, Enforcement and Reclamation, or OSMRE, and the Justice companies, including the governor’s son, Jay Justice, to settle unpaid fines abruptly fell apart earlier this month.

James C. Justice III, left, watches his father’s inauguration as governor. He has assumed control of some Justice family companies. Photo courtesy: Office of WV Governor

Two weeks ago, another federal mining regulatory agency, the Mine Safety and Health Administration, or MSHA, and U.S. Department of Justice filed a civil lawsuit against 23 coal companies owned by the Justices, seeking more than $4.7 million in unpaid fines and fees for mine safety and health violations.

The Justice companies contend the civil lawsuit by MSHA and the Justice Dept. was surprising, and argue in the newly filed litigation that it may have pushed officials at the OSMRE to back away from a proposed $250,000 settlement agreement.

However, in a May 15, 2019, letter to lawyers representing the Justice companies that was included in the lawsuit, John Austin, the field solicitor in the Interior Department’s Knoxville office, wrote that the believed settlement, and any settlement over $100,000, could not be approved without approval from the Justice Dept.

“Therefore, notwithstanding your clients’ assertion about a deal they believe they made with OSMRE, there is not nor has there been an authorized agreement with the United States to settle the monetary debts of your clients for $250,000.00, or for any other amount,” Austin wrote.

The lawsuit describes a month-long effort by representatives from the Justice companies to settle fines from more than 100 violations at Justice mines dating back to 2017 as well as fines assessed against Jay Justice personally. The dollar amounts of the fines associated with the violations were redacted in the lawsuit.

Problem Properties

Unreclaimed mine lands can present hazards to public safety and property for those living nearby.

For example, a Justice-owned surface mine in eastern Kentucky, Bevins Branch, has repeatedly caused flooding and other damage to residents living nearby, according to state regulatory documents.

In October 2018, floodwaters washed away the road to Elvis and Laura Thacker’s home, located about a quarter-mile downhill from the mine, trapping them inside. A similar June 2016 flood caused mold and about $148,000 in damages.

Despite a history of reclamation violations and complaints by residents, the mine, owned by Justice-controlled Kentucky Fuel Corp., remains the subject of a years-long dispute between the Justice family and regulatory agencies.

Last fall, Kentucky officials said the Justice companies owed $2.9 million in reclamation penalties. Representatives for Kentucky Fuel Corp. dispute the amount and say they have made significant progress addressing violations at Bevins Branch.

Still, last October, OSMRE issued an immediate harm cessation order for the site, and Bevins Branch appears to be one of the mines with unpaid fines included in the new lawsuit.

Debris left by flood waters on the Thackers’ property. Photo: Sydney Boles, Ohio Valley ReSource

Settlement Timeline

According to the suit, on April 8, 2019, Jay Justice and Justice Mining Entities COO Tom Lusk met with Michael Castle, the field office director of the OSMRE Knoxville and Lexington field offices and OSMRE official Mark Snyder in Knoxville.

During the meeting, according to the lawsuit, Jay Justice proposed that his companies would prioritize completing mine reclamation work “in lieu of the penalty assessments and that the penalty assessments be reduced by the cost of the reclamation work.”

According to the document, Castle, with OSMRE, said that because the delinquent mines were not currently operational and “the companies are not obtaining any financial benefit through non-compliance” he believed he had the authority to create a settlement agreement.

The group agreed that if the total amount of penalties owed was not reduced below $250,000 after this reclamation work, the Justice companies would pay that amount over a year to satisfy the remaining debt.

Later that day, the parties returned for a second meeting, this time with their lawyers present, including Austin, the Interior Dept.’s field solicitor based in Knoxville. Austin asked the Justice companies to provide collateral that they could satisfy the agreement, to which the Justice companies agreed.

Later, at another meeting, the question of whether the Justice companies would need to provide collateral was left unresolved, according to the lawsuit.

Justice company representatives said they left the April meetings believing an agreement was in place. They said a letter to Austin, sent in late April, inviting him to ask for any additional financial information from the Justice companies, went unanswered.

During that time, the Justice companies said they began doing reclamation work.

“In the week of May 6, 2019, the government’s attitude toward the Justice Mining Entities noticeably soured,” the lawsuit states. That week, MSHA and the Justice Dept. filed suit seeking $4.7 million in unpaid mine health and safety fines from the Justices.

Gov. Justice takes the oath of office as his son James C. Justice III (center) looks on. Photo courtesy: WV Governor

Days later, after agreeing to “suddenly renewed” requests for collateral and more financial information from the Justice companies, the lawsuit states they received the May 15 letter from Austin stating that the settlement agreement had not been made. Instead, he wrote that a letter authorizing the Justice Dept. to file suit against the Justice companies on behalf of the Interior Department had been issued.

“We have suggested on more than one occasion that a showing of good faith will benefit your clients if they intend to pursue settlement,” Austin wrote, including “continuing to abate the environmental violations that exist in Tennessee and by making good on a settlement agreement negotiated on their behalf in 2017.”

A request for comment to OSMRE was referred to the Justice Dept., which did not immediately reply.

In a statement from Justice company Bluestone Coal Corp., Jay Justice said the companies are still seeking a settlement agreement with the federal government, but the “incident with MSHA” made an impression.

“We don’t want to have to go to court to get the government to do the right thing and live up to its end of the bargain, but we can’t sit back and let the government take advantage of our good faith efforts to resolve this matter,” he said.

Pattern of Behavior

The Justice companies have a documented history of racking up mine safety fines, failing to pay taxes and inadequately completing reclamation work.

In April the ReSource analyzed MSHA data on delinquent penalties for mine safety and health violations and found that the Justice companies owed more than $4 million, the highest such amount in the U.S. mining industry.

The companies have also repeatedly failed to pay suppliers. A review of court documents by the ReSource last fall found at least five cases in which judges ruled that Justice family companies failed to pay suppliers for goods or services. When compelled by courts to pay, the companies either refused or failed to meet agreed-upon payments.

These cases, dating back to 2013, include a failure to pay for a range of common coal industry needs, such as parts for mining equipment, coal barge services, insurance and the royalties due to mineral property owners. The debts the Justice family companies owed in these cases ranged from just under $150,000 to a little more than $3 million.

In all five cases, the courts authorized U.S. Marshals to seize assets from the Justice family companies’ bank accounts in order to recover the debts. However, in some cases, officials discovered the bank accounts were empty or closed.

Continue Reading

Trending