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Us & Them: Three Tales of Coal

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Miners at Kaymoor Mines, West Virginia. Photo: West Virginia State Archives

For decades, coal was king in West Virginia. It paid good wages, paid the bills for many local services through taxes, and kept small towns alive. But more of our nation’s electricity is starting to come from other sources like wind and solar power. Coal is losing out.

This Us & Them episode brings us three tales of coal and its future in Appalachia. Two of those tales come from men who grew up in the same neighborhood in Charleston, WV and now hold very different perspectives. Andrew Jordan owns mines. Joe Lovett is an environmental lawyer. Our third tale comes from journalist Ken Ward, who has covered the coal industry for decades. He says West Virginia needs to look at another energy player – natural gas – to determine its future.

Us & Them is a joint project of West Virginia Public Broadcasting, PRX and Trey Kay Productions. You can subscribe to Us & Them on Apple PodcastsNPR OneRadioPublicSpotifyStitcher and beyond. 

This article was originally published by West Virginia Public Broadcasting.

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Ohio-based Coal Giant Murray Energy Declares Bankruptcy

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Bob Murray speaking at an event in October, 2019. Photo: Sydney Boles/Ohio Valley ReSource

This article was originally published by Ohio Valley ReSource.

Murray Energy Corp., the largest underground coal mining company in America with a substantial footprint across the Ohio Valley, has filed for bankruptcy protection. 

“Although a bankruptcy filing is not an easy decision, it became necessary to access liquidity and best position Murray Energy and its affiliates for the future of our employees and customers and our long term success,” company founder Robert Murray said in a release.

According to the release, the company filed first-day motions with the bankruptcy court Tuesday and expects to be able to continue day-to-day operations uninterrupted. The company says it will finance its operations throughout Chapter 11 with cash on hand and access to a $350 million new money debtor-in-possession financing facility, subject to court approval.

CEO Robert Murray, who founded the business in 1988, is stepping down. According to the release, a new entity, called Murray NewCo, will serve as a “stalking horse bidder” to acquire most of the company’s assets. If approved by the court, the company expects all of its debt to be eliminated and Murray to be named Chairman of the Board of Murray NewCo.

Murray Energy is the ninth coal producer to seek bankruptcy during the Trump administration. Murray’s declaration follows the chaotic and high-profile bankruptcy of West Virginia-based Blackjewel LLC and Kentucky-based metallurgical coal mining company Blackhawk Mining.

The company turned to bankruptcy after it failed to make payments to lenders. Murray Energy prided itself on producing low-cost bituminous coal at mines located close to its customers — largely coal-fired power plants. But as coal generators close, that has posed challenges for the company’s bottom line. 

Despite promises by President Donald Trump to revive the U.S. coal industry, demand for coal has fallen to its lowest level in 40 years, according to the EIA. 

Federal mining data show the Ohio-based company operates 15 active mining facilities across seven states, including 10 in West Virginia and two in Ohio. A Murray subsidiary operates seven mining facilities in Kentucky

According to data by the U.S. Energy Information Administration, in 2018, Murray Energy was the fourth-largest coal producer in the U.S., producing more than 46,000 short tons of coal. 

According to its website, the company employs nearly 7,000 people at its U.S. operations and at mines in Colombia. 

Trump Connection 

The company’s chief executive, Bob Murray, has enjoyed a close relationship with the Trump administration. Murray has often appeared with the president during his appearances in West Virginia. In July, he hosted a private fundraiser for Trump in Wheeling, West Virginia. 

In February, Trump took to Twitter to urge the Tennessee Valley Authority to not shutter the Paradise Fossil Plant in Kentucky, which is largely supplied by Murray mines. 

A vocal Trump supporter, Murray donated $300,000 to the president’s inauguration. Weeks later, the coal executive shared a detailed “action plan” with administration officials that outlined a series of environmental rollbacks and policy changes that would benefit the U.S. coal industry. 

The majority of Murray’s wish list — which included the repeal and replacement of the Obama-era Clean Power Plan, withdrawal from the Paris climate agreement, and staff cuts at the U.S. Environmental Protection Agency — have been carried out by the Trump administration. 

However, the White House has been unable to fulfill one of Murrary’s chief requests — to bailout struggling coal-fired power plants. 

In 2017, FERC unanimously rejected a proposal by the Energy Department to subsidize coal and nuclear plants. Additional efforts — largely driven by the Department of Energy — have stalled

Speaking last week at the EnVision Forum at the University of Kentucky Center, Murray told the crowd continued inaction by federal regulators, including the Federal Energy Regulatory Commission, or FERC, has resulted “in the destruction of America’s coal industry, the reliability and resilience of the electric power grid, and the cost of electricity itself.”

The country’s largest regional grid operator, PJM Interconnection, which operates across a 13-state region including the Ohio Valley, has argued there is no need for federal intervention. 

Credit: Alexandra Kanik/Ohio Valley ReSource

Murray also repeated his oft-cited nickname for the independent agency calling it “feckless FERC.” 

“Nothing has been done by FERC or anyone to save the American coal industry from extinction, and we are virtually extinct,” he said. 

Major Impact

Murray Energy’s bankruptcy could have far-reaching impacts on the company’s workers. According to United Mine Workers of American Spokesperson Phil Smith, Murray Energy is the last major company contributing to the UMWA’s pension plan, and is likely to accelerate the plan’s fast decline into insolvency. 

In August 2007, nine miners and rescuers died after the Murray-owned Crandall Canyon mine in Utah collapsed. The Labor Department fined the company $1.85 million for violating federal mine safety law. In 2012, the agency settled with Murray for a reduced amount. The settlement included acknowledgement by Murray Energy for its “responsibility for the failures that led to the tragedy.”

Murray later told NPR “this settlement is not an admission of any contribution to the August 2007 accidents.”

Murray was also sued by the Department of Labor after miners complained the CEO personally told workers in a 2014 meeting to stop making complaints to federal regulators. Under federal law, miners have the right to speak anonymously to government inspectors. Earlier this year, Murray lost an appeal in the case. The court upheld a decision that Murray must personally apologize. 

ReSource reporters Sydney Boles and Becca Schimmel contributed to this story.

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

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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.

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

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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. 

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